NCLT rejects CIRP plea against Dilip Buildcon

MUMBAI: The Indore bench of the National Company Law Tribunal (NCLT) has rejected a petition filed by an operational creditor seeking to initiate bankruptcy proceedings against construction company Dilip Buildcon.

Steel Scaff (India) had approached the tribunal that handles bankruptcy cases in 2020 alleging a default of Rs 2.62 crore by Dilip Buildcon.

Countering this, the construction company argued that the application was not maintainable as there was already a dispute between the two sides over the claim raised by the applicant at the NCLT.

It also argued that its purchase orders specifically stated that in case of any dispute, the parties would invoke arbitration which would take place in Bhopal. Therefore, the insolvency application has been filed in violation of the terms of the purchase orders and without exhausting the available remedies, Dilip Buildcon argued.

“The NCLT only adjudicates based on admitted dues and cannot be made to conduct the proceedings by way of a detailed trial to ascertain the amount of debt claimed,” said Yogendra Aldak, partner at law firm Lakshmikumaran & Sridharan Attorneys. “Hence, in cases of pre-existing disputes between an operational creditor and a corporate debtor, instead of approaching the NCLT, the operational creditor should choose other avenues including but not limited to civil suits or arbitration as the case may be.”

Dilip Buildcon had approached Steel Scaff in 2017 to source equipment for scaffolding, shuttering, propping and pit-propping for its projects. It claimed that the supplier provided substandard material, and that too after a considerable delay of time.

The supplier claimed that “the legal notice dated May 7, 2018, issued by the respondent (Dilip Buildcon) disputing the quality of the material is prior to the demand notice dated March 5, 2020, issued by the applicant”, the bench presided over by judicial member P Mohan Raj and a technical member Kaushalendra Kumar Singh observed in its order last week.

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Roy Walsh

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