NCLT Dismisses Insolvency Plea Against Good Value Chemicals Citing Pre-Existing Dispute

(MENAFN- KNN India) New Delhi, Aug 5 (KNN)
The National Company Law Tribunal (NCLT) in New Delhi has dismissed an insolvency application filed by Mayfair Biotech Private Limited against Good Value Chemicals Private Limited.

The ruling, delivered on July 11, 2024, underscores the importance of pre-existing disputes in insolvency proceedings.

The NCLT bench, comprising Judicial Member Mahendra Khandelwal and Technical Member Sanjeev Ranjan, found sufficient evidence of a pre-existing dispute.

The tribunal noted two key factors in its decision. First, a debit note issued by Good Value Chemicals, claiming compensation for allegedly defective raw materials.

Second, a pending reference under the Micro, Small and Medium Enterprises Development Act, which was initiated prior to the insolvency application.

The NCLT emphasised that a plausible contention of dispute is grounds for rejecting insolvency applications.

Mayfair Biotech sought to initiate the Corporate Insolvency Resolution Process (CIRP) against Good Value Chemicals for an outstanding debt of Rs 2.17 crore.

This ruling highlights the complexities in initiating insolvency proceedings and the significance of addressing pre-existing disputes through appropriate channels before resorting to the Insolvency and Bankruptcy Code.

The decision serves as a reminder to creditors to thoroughly evaluate and resolve ongoing disputes before pursuing insolvency action against debtors.

It underscores the importance of addressing underlying issues in commercial relationships before seeking legal remedies under insolvency laws.

(KNN Bureau)

MENAFN05082024000155011030ID1108518979