The National Company Law Tribunal (NCLT) has affirmed that liquidation proceedings under the Companies Act do not prohibit the filing of a Section 9 petition under the Insolvency and Bankruptcy Code (IBC). The Mumbai Bench, comprising Judicial Member VG Bisht and Technical Member Prabhat Kumar, addressed a petition by an operational creditor seeking recovery of Rs. 2,36,21,491.
The operational creditor had initiated statutory arbitration under the Micro, Small, and Medium Enterprises Development Act 2006 against the Corporate Debtor for unpaid invoices. After the execution application’s dismissal, the creditor filed a Section 9 IBC petition. The corporate debtor had also challenged the arbitral award in the high court.
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The bench noted that the last invoice was issued between January 2012 and June 2013, and the limitation period under the Limitation Act would have lapsed in 2016. Even if determined from the date of the decree under the MSME Act, it would expire on 17.08.2019.
Importantly, the tribunal observed that the petition seemed oriented toward recovery rather than resolution under the IBC, concluding that it doesn’t survive on this ground. This decision provides clarity on the interplay between liquidation proceedings and Section 9 petitions, emphasizing the distinct nature of IBC resolutions.
