NCLAT Dismisses Korea Trade Insurance Insolvency Plea

New Delhi, Oct 15 (PTI) The National Company Law Appellate Tribunal (NCLAT) has dismissed an insolvency appeal against Amrit Polychem filed by Korea Trade Insurance Corporation.

The appellate tribunal has upheld the order passed by the Mumbai Bench of the National Company Law Tribunal (NCLT), observing a preexisting dispute between the parties.

The NCLAT said Korea Trade Insurance Corporation (Ksure) was well aware of the fact that there was a preexisting dispute before stepping into the shoes of the JT Corporation (JTC).

Amrit Polychem had placed three purchase orders to JTC for the supply of certain goods. In terms of the Purchase Orders and related Proforma Invoices, payments were due after 90 days from the Bill of Lading date of the goods under shipment.

Korea Trade Insurance Corporation is the insurance company for JTC. The goods were not supplied to Amrit Polychem within the due date of January 31, 2017, and no payments were made thereto.

Due to the non-receipt of payment by JTC, Ksure, being the insurer company, reimbursed the amount. After this, the debt due was assigned by JTC to Ksure by a Letter of Assignment dated December 20, 2017.

Based on that, a demand notice was issued by Korea Trade Insurance Corporation to the Indian entity, which denied its claims. Later, it approached the Mumbai bench of the NCLT by filing a section 9 application under IBC to initiate insolvency proceedings against the Indian entity.

The NCLT, however, dismissed the Section 9 application on August 2, 2023, on grounds of pre-existing dispute, and aggrieved by that order, KTIC filed an appeal before the NCLAT.

However, the NCLAT also upheld the NCLT findings and said: "We are satisfied with the findings of the Adjudicating Authority (NCLT) dismissing the present Section 9 application on grounds of preexisting dispute".

The appellate tribunal also said that it does not find it necessary or relevant to go into the other issues raised by the Indian entity, as the Section 9 application was barred by limitation or that the appellant did not qualify to be an Operational Creditor since the LoA was an invalid and unregistered document.

"For the reasons discussed above, the Appeal is found to be devoid of merit and stands dismissed. We find no reasons to modify the impugned order," the NCLAT said.

However, it granted "liberty to Ksure to seek alternative recourse that may be available to them before any appropriate forum in accordance with law".