The Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday admitted Cian Healthcare under insolvency following an application filed by one of its operational creditors over unpaid dues worth ₹1.14 crore.
The bench has appointed Roshen Chordiya as the interim resolution professional for the company.
Insolvency filed by creditors
Shreeji Pharmachem, the operational creditor, had moved the NCLT by filing an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Pune-based drugmaker. Section 9 allows operational creditors—who supply debtors products or services—to initiate insolvency proceedings following a default on its dues.
“The creditor has thus successfully demonstrated and proved the debt and default in this case. It is noted that the CD (corporate debtor) admits the said outstanding debt. Therefore, we are of the considered view that this application is complete and satisfies all the necessary requirements for admission under Section 9 of the IBC,” said a bench led by justices K. R. Saji Kumar and Sanjiv Dutt while admitting the company under insolvency.
Advocate Nausher Kohli represented Cian Healthcare while Manoj Shirsat appeared for the operational creditor.
The company defaulted on dues worth ₹1.14 crore, based on eleven unpaid invoices for goods supplied to Cian Healthcare. Following the default, the creditor initiated insolvency proceedings against the company.
The counsel for Shreeji Pharmachem argued that there were attempts for settlement of dues between the parties. However, the debtor changed its stance during the settlement process, indicating its lack of willingness or capability to settle the aforesaid dues. The fact that the company had admitted to the debt and default by its reply in October 2021, as well as its affidavit-in reply in September 2023, shows that the present application should be allowed, he added.
Cian’s argument
On the other hand, Cian’s counsel argued that by using the raw materials supplied by the creditor, the company manufactured Albendazole tablets and supplied it to the government of Andhra Pradesh for distribution. However, there were complaints regarding its quality which resulted in sample inspection by the drug controller, in which the tablets were found to be defective and ‘below the standard quality’. Moreover, the government of Andhra Pradesh not only withheld payments to the drug firm but also did not give any reply as regards payments due to it.
As a result of the poor quality of raw materials supplied by Shreeji Pharmachem, the company suffered huge financial and reputational loss, Kohli argued.
Cian Healthcare manufactures and distributes pharmaceutical products. It had approached the creditor for delivering certain raw material for manufacture of Albendazole Tablets during 2020-22.
