The National Company Law Court (NCLT) initiated insolvency proceedings against the construction company Ahluwalia Contracts India Ltd for default of payment to an operational creditor.

The New Delhi-based NCLT bench welcomed the insolvency plea filed by A2 Interiors Products Pvt Ltd against Ahluwalia Contracts, claiming the default of Rs 14.10 crore, and appointed an interim resolution professional.

Ahluwalia Contracts had engaged A2 Interiors Products for interior, furnishings and related civil and electrical works at various project sites. It had supplied materials to Ahluwalia Contracts under various work orders issued for six projects in different locations across the country, according to the NCLT order.

She had issued invoices for each work order, which had been duly received by Ahluwalia Contracts, but she did not make the full payment.

Later, in May 2019, A2 Interiors issued a notice to Ahluwalia Contracts under the Insolvency and Bankruptcy Code (IBC) demanding Rs 12.54 crore with interest of 18% per annum, which was rejected by Ahluwalia Contracts in its response and raised. disputes.

Following this, A2 Interiors approached the NCLT under Article 9 of the IBC, which allows operational creditors to file an insolvency plea, claiming a total debt of Rs 14.10 crore against Ahluwalia Contracts.

Ahluwalia Contracts objected, claiming that it could not be maintained, on the grounds that it arises from different work orders, which cannot be claimed under a single request and of a different nature of service and that each contract gives rise to an alleged separate debt.

He also alleged that the Applicant had concealed certain facts and documents and had not disclosed all the work orders carried out between the parties.

However, the Operational Creditor stated that while this is a work order for six different projects, the Corporate Debtor is a prime contractor. It also maintained that no notice of dispute had been raised by Ahluwalia Contracts before the notice of formal notice issued by it.

An NCLT bench comprising members Sumitapurkayastha and Deepti Mukesh said: “Considering the documents on the cases and the submissions made, it is seen that there is an operational debt which is due and payable by the debtor company.” He further observed that once the work is completed and the final invoice is issued, the retention becomes due and payable.

Although the debtor company raised a dispute before the issuance of the formal notice regarding the failure to complete the work on time, the defective work and the invoices raised, but itself admitted that the security holdback is due.

While admitting A2 Interiors’ plea, the NCLT observed that the debtor company admitted its debt and that said debt became due in accordance with its own statement in its email, leaving no possibility of further decision.