NCLT Delhi Rules, Corporate Debtor Can't Deny Transaction For Which It Earlier Gave Approval
Pranav B Prem
The National Company Law Tribunal, New Delhi Bench (Court VI), comprising Shri Mahendra Khandelwal (Judicial Member) and Shri Atul Chaturvedi (Technical Member), has admitted a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by M/s Liberium Global Resources Pvt. Ltd. against M/s Amritsar MSW Limited. The Tribunal held that a corporate debtor cannot deny the applicability of a revised wage structure which it had earlier expressly approved.
Background
The dispute arose from a Concession Agreement executed between the Municipal Corporation of Amritsar (Concessioning Authority), Amritsar MSW Limited (Corporate Debtor), Essel Infraprojects Limited (Selected Bidder), and the Department of Local Punjab Government. The agreement aimed to implement an integrated waste management system, for which a Sale Agreement was entered into between the Corporate Debtor and the Operational Creditor, effective retrospectively from April 1, 2018.
Following changes in management, Averda Waste Management Investments India Pvt. Ltd. assumed control of the Corporate Debtor via a Supplemental Concession Agreement in June 2020. Subsequently, in November 2021, the Punjab Government revised the minimum wages under applicable law. The Operational Creditor sent the revised salary structure to Averda for confirmation, which was accepted via email correspondences in December 2021. Invoices reflecting these revised wages were thereafter raised.
Despite the acceptance, Averda, acting for the Corporate Debtor, later backtracked, citing a pending challenge to the wage notification before the Punjab and Haryana High Court. No stay was granted by the Court in that matter, and neither Averda nor the Corporate Debtor were parties to those proceedings. Despite follow-ups, the revised payments were denied, and the agreement was unilaterally terminated in March 2022. The Operational Creditor later issued demand notices, including one confined solely to invoices raised on the Corporate Debtor under the binding agreements.
Corporate Debtor's Defence
The Corporate Debtor argued that the only operative agreement between the parties was the Sale Agreement dated February 1, 2019, under which all dues had already been paid. It claimed to have cleared 18 invoices during 2021, amounting to ₹8.97 crores, even making excess payments, which were adjusted later. The Corporate Debtor insisted that no other agreement existed and that Averda's communications could not bind it, as Averda was not formally a party to the current proceedings. It also contended that the Operational Creditor relied on disputed invoices, including a proforma invoice, and failed to provide documentation through an Information Utility, alleging procedural defects in the Section 9 application.
Tribunal's Findings
The Tribunal rejected the Corporate Debtor’s contentions and observed that Clause 5 of the Concession Agreement mandated the Corporate Debtor to comply with all applicable labour laws, including revisions in minimum wages. Clause 8 further defined "Change in Law" to include modifications of Indian law, thus making the Corporate Debtor liable to implement the revised wage structure.
The Tribunal took note of the fact that the Corporate Debtor, through Averda, had accepted the revised wage structure and even made full payment for December 2021 based on the revised figures. However, the Corporate Debtor later refused to comply with the new wage regime on the pretext of a High Court case, despite there being no stay or injunction in that proceeding.
It was emphasized that the Corporate Debtor raised no objections until a formal demand notice was issued. The Tribunal cited the Supreme Court’s ruling in Union of India v. N. Murugesan & Ors [(2022) 2 SCC 25], reinforcing the principle that a party cannot approbate and reprobate — i.e., accept a benefit from a transaction and later deny its validity. The NCLT further held that the Corporate Debtor failed to establish any pre-existing dispute and that the petition satisfied all statutory requirements under Section 9 of the IBC. The unpaid operational debt was quantified at ₹2,28,65,774.
The Tribunal admitted the Section 9 petition and initiated the Corporate Insolvency Resolution Process against M/s Amritsar MSW Limited. Mr. Deepak Kumar Goyal was appointed as the Interim Resolution Professional. A moratorium under Section 14 of the Code was also imposed. The Tribunal made it clear that the Corporate Debtor, after accepting the revised wage structure and paying one invoice accordingly, could not later disown its commitment. As a result, the default was found to be legally unsustainable, and insolvency proceedings were allowed to proceed.
Appearance
For the Applicant: Mr. Utsav Mukherjee, Mr. Saksham Ahuja, Mr. Mayukh Roy, Mr. Bhaskar Pandey, Advs.
For the Respondent: Mr. Aslam Ahmed, Mr. Rohit Jain, Mr. Harilal, Mr. Zeeshan Haidar, Mr. Shubham Soni, Advs
Cause Title: M/s Liberium Global Resources Private Limited V. M/s Amritsar MSW Limited
Case No: Company Petition IB/142/ND/2024
Coram: Shri Mahendra Khandelwal [Hon’ble Member (Judicial)], Atul Chaturvedi [Hon’ble Member (Technical)]
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