New Delhi NCLT admits Brij Gopal Construction into insolvency

New Delhi NCLT admits Brij Gopal Construction into insolvency

Notes that the scope of IBC was limited to the existence of debt and default in its payment

The New Delhi Bench of the National Company Law Tribunal (NCLT) has initiated Corporate Insolvency Resolution Process (CIRP) against Brij Gopal Construction Company Pvt. Ltd.

The Bench comprising Bachu Venkat Balaram Das (judicial member) and Atul Chaturvedi (technical member), was adjudicating a petition filed in the Geocon Infra Pvt. Ltd. vs Brij Gopal Construction Company Pvt. Ltd case, wherein Mukesh Kumar Jain was appointed as the Interim Resolution Professional (IRP).

Brij Gopal Construction (Corporate Debtor), one of the top contracting companies in Haryana, is engaged in the business of infrastructure development works including roads and highways, sewerage, stormwater, drain water supply, works management, and housing projects.

Geocon Infra (Operational Creditor) is engaged in the infrastructure business.

In April 2018, the corporate debtor issued a work order to the operational creditor for construction work related to the ‘Four-Laning of Bineka to Goharganj of Bhopal - Jabalpur (NH-12) Highway Project’ in Madhya Pradesh.

The Corporate Debtor did not make any payment towards certain invoices raised by the Operational Creditor. Therefore, the latter filed a petition under Section 9 of the Insolvency and Bankruptcy Code. (IBC). Over a default of Rs.1.5 crores, it sought initiation of CIRP proceedings against the corporate debtor,

However, the Corporate Debtor disputed the amount payable, since the final bill amount could only be arrived at after the reconciliation of the accounts, which was not done.

The Corporate Debtor is a solvent company having a net worth of Rs.1002 crores as on 31 March 2022. This was as per its provisional balance sheet for the Financial Year 2021-22. Therefore, it could not be sent into insolvency.

The Tribunal noted that the scope of IBC was limited to the existence of debt and default in its payment.

The NCLT held, “The debt arises out of the work order dated 18.04.2018. The said amount is a debt disbursed against the consideration owned by the operational creditor. Hence, it is covered under the definition of the ‘operational debt’ as defined under Section 5(21) of IBC. The applicant will be treated as an ‘operational creditor’ as defined under Section 5(20) of the Code.”

Thus, the Tribunal admitted the corporate debtor into CIRP.