New Delhi, The National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal by a suspended director of Farm2Energy, upholding insolvency proceedings against the company over an unpaid advance related to a biomass bales supply contract.
A three-member bench dismissed the appeal filed by Sukhbir Singh, a director of the suspended board of the Ludhiana-based Farm2Energy, and rejected his contentions of a pre-existing dispute and the existence of no ‘valid operational debt’.
The appellate tribunal noted that email correspondence placed on record by the appellant himself (Singh) worked against his case.
An email dated December 27, 2022, from a company representative had acknowledged the outstanding liability and sought additional time to arrange funds for repayment, undermining the claim of a pre-existing dispute.
“The Appellant has failed to establish a pre-existing dispute basis these emails. Otherwise, debt and default are accepted, and therefore we do not find any infirmity in the order of the NCLT,” said NCLAT.
NCLAT, in its 22-page-long order, also directed Singh to cooperate with the Resolution Professional in the ongoing CIRP (Corporate Insolvency Resolution Proceedings).
In its order, the NCLAT bench comprising Justice N Seshasayee, Arun Baroka and Indevar Pandey, noted that Singh is not cooperating in the CIRP.
The dispute arose from a July 2022 agreement between Farm2Energy and Verbio India for supply of 20,000 tonnes of paddy biomass bales worth Rs 4.4 crore.
Verbio had paid an advance of Rs 1.54 crore, 35 per cent of the total agreement value; however, Farm2Energy failed to complete the agreed supply within the stipulated period ending December 15, 2022.
After issuing a legal notice and a subsequent statutory demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC) in January 2023, Verbio approached the National Company Law Tribunal (NCLT), Chandigarh Bench, claiming a default of Rs 1.19 crore with an interest rate of 9 per cent.
NCLT admitted the Section 9 petition on September 9, 2024, triggering CIRP against the company.
Singh had challenged the order, arguing that the alleged dues did not qualify as “operational debt” under the IBC, that the demand notice was not properly served, and that a pre-existing dispute over the quality of biomass bales barred admission of the insolvency plea.
He also contended that the proceedings would jeopardise the company’s seasonal farming operations across Punjab and Haryana.
