The NCLAT, New Delhi Bench opined that reason that Corporate Debtor or its Bankers were unable to obtain permission for remittance of amount overseas, could not be made a reason to hold that no default is committed. 

In the present case, Corporate Debtor has time and again acknowledged the debt. 

It was noted that the the default has been committed by the Corporate Debtor, which was an admitted fact and repeated acknowledgment by the Corporate Debtor and promises to make the payments were in vain. 

Brief Facts: 

The Corporate Debtor purchased Digital Migration radio, intrinsically Safe Mission Critical Digital Radio, Tetra portable Terminal its system and application, Mobile Radio, Portable Radio Critical Surveillance & Dispatch System and wireless Video Transmission System and its Accessories from the Operational Creditor and failed to pay the invoices. 

The outstanding debt was acknowledged time and again, however remained unpaid. The Operational Creditor issued a notice under Section 433, 434 and 439 of the Companies Act, 1956 , however before winding up petition could be filed, the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC”) was enforced and the Operational Creditor thereafter issued a Demand Notice. 

In the Company Petition, a settlement was reached, however Corporate Debto failed to honour the terms of the settlement. 

Thereafter, the Corporate Debtor made a statement that it is willing to pay subject to confirmation by the Reserve Bank of India. The NCLT directed the Corporate Debtor to make the deposit of the approximate conversion of USD in Indian Rupees and place the same with the Registry within 60 days from the order. 

The NCLT was of the view that failure of the Corporate Debtor in discharging the admitted outstanding debt has become a force majure, therefore application was not admitted and CIRP was not initiated. 

Hence, the present appeal has been filed by the Operational Creditor and Corporate Debtor.

Contentions of the Operational Creditor:

It was contended that Corporate Debtor’s plea that he could  not obtain permission of the RBI could not be construed a ground to refuse to admit Section 9 Application. Further, the Corporate Debtor repeatedly disobeyed the orders of the Court. 

Contentions of the Corporate Debtor:

It was argued that IBC does not provide any provision for directing the Corporate Debtor to deposit funds with the Registry. Further, it was urged that the NCLT could not operate as an equity Court. 

 Observations of the Tribunal: 

It was observed that the Corporate Debtor has time and again acknowledged the debt. 

It was noted that the the default has been committed by the Corporate Debtor, which was an admitted fact and repeated acknowledgment by the Corporate Debtor and promises to make the payments were in vain. 

It was opined that reason that Corporate Debtor or its Bankers were unable to obtain permission for remittance of amount overseas, could not be made a reason to hold that no default is committed. 

The decision of the Tribunal: 

Based on the aforementioned reasons, the Bench was of the view that the order of the NCLT refusing to initiate CIRP must be set aside. Accordingly, the order of the NCLT was set aside to this extent. 

Case Title: Hytera Communications Corporation Limited v. Simoco Telecommunications (South Asia) Limited

Case No.: Company Appeal (AT) (Insolvency) No.1116 of 2022

Coram: Justice Ashok Bhushan (Chairperson),  Barun Mitra (Technical Member)

Advocates for Appellant: Advs. Mr. Preet Pal Singh, Mr. Saurabh Sharma

Advocates for Respondent: Advs Kumarpal R Chopra, Chiron Singh 

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