Authority: National Company Law Tribunal (NCLT), New Delhi Bench Court-IV
Order Date: The order is contained within the document but a specific date is not explicitly stated in the provided text.
Case Overview
This application (I.A. No. 1963/ND/2025) was filed in the main Company Petition No. IB/285/ND/2024 by Mr. Jagdish Kumar Parulkar, the Interim Resolution Professional (IRP) and subsequently confirmed Resolution Professional (RP) for M/s Shyam Indofab Pvt. Ltd. (Corporate Debtor). The application was filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) against the respondent, Nirmal Ujjwal Credit Operating Society Ltd.
The dispute arose from an Agreement of Leave and License cum Business Deed dated 24.04.2024 between the Corporate Debtor and the Respondent. This agreement granted the Respondent exclusive use of the Corporate Debtor's manufacturing premises, plant and machinery, and workforce for manufacturing knit fabrics under the Respondent's brand name. Key contractual obligations included a monthly license fee of Rs. 5,00,000 payable in advance (Clause 4) and the Respondent's responsibility to pay all electricity, utility dues, and wages of workers (Clause 9).
The Corporate Insolvency Resolution Process (CIRP) against Shyam Indofab commenced on 27.08.2024. The IRP allowed the Respondent to continue operations to derive commercial benefit for the corporate debtor's estate. However, the Respondent failed to pay: (a) license fee for September 2024 to January 2025 amounting to Rs. 25,00,000; (b) employees' salaries amounting to Rs. 1,80,00,000; and (c) electricity dues amounting to Rs. 35,48,690, which led to the disconnection of electricity supply. The total claimed amount is Rs. 2,15,48,690.
Despite repeated emails, reminders, and notices from the Applicant, the Respondent did not clear the dues. Consequently, the Applicant terminated the Agreement on 17.01.2025, with a termination notice sent on 20.01.2025. In a reply dated 23.01.2025, the Respondent did not contest the termination but sought the release of stock it had manufactured using the Corporate Debtor's unit, thereby admitting its use of the assets during the claimed period.
The Applicant argued that the NCLT has jurisdiction under Section 60(5)(c) of the IBC, which grants it wide residuary powers to adjudicate questions of law or fact arising from or relating to the insolvency resolution process. The Applicant cited several precedents, including Mr. Ashish Chawchharia, RP of Jet Airways (India) Limited v. TWC Aviation Capital Limited and Ors, Liquidator of Cox & Kings Ltd. v. Vertiv Energy Pvt. Ltd., and Vineet Kumar Chaudhary v. NTPC Ltd., to support the contention that the tribunal can direct payment for the use of corporate debtor's assets during CIRP to prevent unjust enrichment and protect the insolvency estate.
The tribunal analyzed the scope of its power under Section 60(5) of the IBC, referencing the Supreme Court's judgment in Gujarat Urja Vikas Nigam Ltd. vs. Amit Gupta and Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta. It emphasized that the IRP/RP's duty is to run the corporate debtor as a going concern and maximize asset value for all creditors. The tribunal found that the Respondent's non-payment of admitted dues directly hindered this objective and the smooth functioning of the CIRP.
The Respondents failed to appear despite service of notice, including court notice and Dasti service, and were set ex-parte.
Final Outcome
The NCLT allowed the application. It directed the Respondent, Nirmal Ujjwal Credit Operating Society Ltd., to clear all the outstanding dues totaling Rs. 2,15,48,690 within 4 weeks from the receipt of the order. The tribunal held that the Respondent's enjoyment of the Corporate Debtor's assets during the CIRP period without payment constituted an unjust enrichment that burdened the insolvency estate, and payment was necessary to fulfill the IRP's mandate of running the company as a going concern.
Topics: Insolvency Resolution, Contractual Default, NCLT Jurisdiction