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Visa Coke Limited v. M/S Mesco Kalinga Steel Limited

Civil Appeal · 2025 INSC 597Decided 29 Apr 2025
Civil Appeal No. 357 of 2025
Justice J.B. Pardiwala · Justice R. Mahadevan

Background

Visa Coke Limited (an operational creditor selling industrial coke) supplied goods worth a large sum to Mesco Kalinga Steel Limited under a 2019 contract that was later amended several times regarding delivery terms. When Mesco allegedly failed to pay, Visa Coke sought to initiate the Corporate Insolvency Resolution Process against it under Section 9 of the IBC. Both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) rejected the application on the technical ground that the mandatory demand notice under Section 8 of the IBC had been sent to a Key Managerial Person of Mesco rather than to the company itself, and so could not count as a valid notice.

Decision Breakdown

The Supreme Court held that this technical rejection was incorrect and unsustainable, without laying out its full reasoning on the notice question in the excerpted text; it also found that the lower forums had wrongly avoided deciding a genuine, disputed issue: Mesco's claim that the original contract had been "novated" (replaced by a new arrangement) when Visa Coke allowed goods to be lifted without advance payment, which would affect the actual date of default. Since determining the correct default date and whether novation occurred required weighing evidence, the Court set aside the NCLT and NCLAT orders and sent the matter back to the NCLT to decide the Section 9 petition afresh on its merits, after hearing both sides and receiving evidence.

Lesson Learnt

Insolvency proceedings should not be thrown out on narrow procedural technicalities about how notice was served when substantive, evidence-based disputes (like whether a contract was later modified, and when a real default actually occurred) remain unresolved: those questions deserve a proper hearing on the merits.

Official source (sci.gov.in)View Judgment (PDF)

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