NCLT directs initiation of insolvency proceedings against Syska LED Lights | Company News

 

It rejected Syska LED Lights’ claims of a pre-existing dispute and said the e-mail exchanged between parties establishes its liability towards its operational creditor.

“We are of the considered view that the applicant has been able to establish the existence of operational debt and its default on the part of the corporate debtor and further that the application has been filed within the period of limitation and also there is no pre-existing dispute between the parties with regard to the transaction in question.

“Accordingly, we hold that it is a fit case for admission under Section 9 of the Code,” said a two-member bench in its order passed on Tuesday.

Earlier, NCLT also directed the initiating of the Corporate Insolvency Resolution Process (CIRP) against Syska LED Light on a petition filed by some other operational creditor. However, the CIRP was withdrawn in May 2024 after a settlement was reached.

Now, again, Syska LED Light is back to the rigours of CIRP over a petition filed by Sunstar Industries, which manufactures, designs, and fabricates electrical home appliances.

It was supplying irons on a 60-day credit period to Syska, which the SSK Group firm was selling under its own brand name.

Initially, the payment terms were duly adhered to by Syska LED Lights, however, it committed substantial default. According to the operational creditor, it defaulted on 25 invoices raised between March 2023 to July 2023.

This debt was even acknowledged on multiple occasions by the corporate debtor Syska by way of multiple emails and post-dated cheques, Sunstar Industries had claimed.

However, this was opposed by Syska during the proceedings contending that the petition is based on falsehoods, deliberate misstatements and suppression of material facts.

It further argued that there is a pre-existing dispute between the parties with regard to the quality of the goods supplied by Sunstar Industries and alleged misuse of IBC as a recovery mechanism and requested to dismiss the petition.

Syska also submitted that an OTS (one-time settlement) proposal was made to the applicant on August 25, 2024 which was not accepted as it was not willing to forgo the interest part of the claim.

However, a two-member NCLT bench comprising Anil Raj Chellan and Kuldip Kumar Kareer rejected Syska’s submission and said it is not disputed that Sunstar Industries has supplied goods worth Rs 7.19 crore and Syska LED Lights has acknowledged its liability in an e-mail-dated-November 22, 2023.

“Merely because the applicant refused to accept the OTS proposal put forth by the corporate debtor cannot be a ground to reject the application under Section 9,” said NCLT.

It further added that, if Sunstar Industries had initiated some proceedings under the Micro, Small and Medium Enterprises Development Act, 2006 for the recovery of the outstanding dues, “it does not debar the applicant” in any way from the filing the application under Section 9 of the IB Code, 2016.

“The Company Petition… is hereby admitted,” said NCLT while directing to put Syska LED Lights under the protection of moratorium under the provisions of IBC.

The 14-page-long NCLT order also said the supply of essential goods or services to Syska LED Lights, if continuing, shall not be terminated or suspended or interrupted during the moratorium period.

“During the CIRP period, the management of the corporate debtor (Syska) will vest in the IRP/RP. The suspended directors and employees of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP/RP,” said NCLT.

First Published: Oct 09 2024 | 12:32 PM IST