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High Court of Karnataka stays insolvency proceedings against ‘Filpkart’ for claiming damages

November 8, 2019[2019] 111 84 (Karnataka)

IBC : High Court of Karnataka stays operation of impugned order passed by NCLT admitting Corporate Insolvency Resolution Process for claiming damages which is outside jurisdiction of NCLT

• Respondent (Cloud Water Streaming Technologies) had imported goods (LED TVs) as per purchase orders made by corporate debtor (Flipkart India Private Ltd.) and corporate debtor had committed default to take said goods due to its inability and thus committed default.

• Hence, respondent had filed petition before NCLT (See annexure) seeking to initiate Corporate Insolvency Resolution Process (CIRP) in respect of corporate debtor which was admitted and Resolution Professional was appointed.

• On Writ Petition before the High Court it was pointed out that NCLT has jurisdiction only in respect of debts and can entertain petitions only where debt is admittedly payable. In case of any other claim NCLT has no jurisdiction and has no power to adjudicate matter. Admittedly respondent had filed petition before NCLT for damages and hence it has no jurisdiction to adjudicate matter. Inspite of same, NCLT admitted the petition and appointed a resolution professional.

• Hence, operation of impugned order passed by NCLT is stayed.

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