Mumbai, March 4: The National Company Law Tribunal (NCLT), Mumbai Bench, has admitted an insolvency application filed by Wadala-based Sunrise Global Tradelinks (SGT) seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against popular bag brand Baggit India Private Limited over an operational debt exceeding Rs 1.11 crore.
While allowing the plea under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, the tribunal rejected Baggit’s defence of a pre-existing dispute, terming it a “moonshine defence.”
Tribunal rejects defence of dispute
“The goods were supplied in May 2025. Looking at the facts of the case, it appears that the defence of pre-existing dispute as pleaded by the bag brand appears to be a moonshine defence. In our view, the present Application is complete in all respects. The Applicant has proved before us that an Operational Debt exceeding Rs One crore is due and payable by the Corporate Debtor (Baggit) to the Operational Creditor (SGT) and that there has been a default in payment of the same,” the order copy reads.
The bench further noted that a demand notice under Section 8 of the IBC was duly issued and served upon the corporate debtor, and despite receipt of the same, Baggit failed to clear the outstanding dues or establish any genuine pre-existing dispute.
Details of purchase orders and invoices
According to the petition, Baggit had placed four purchase orders dated March 15, 2025, for the supply of PVC leathercloth, embroidery strips, metal chains, magnetic buttons, and polyester knitted fabrics used in the manufacturing of handbags and purses.
SGT raised invoices on May 1, 2025, with immediate payment terms. However, despite reminder letters and emails sent in May, June, and July 2025, the payments were allegedly not made.
Demand notice issued under IBC
A statutory demand notice under Section 8 of the IBC was issued on July 17, 2025. As no payment was received within the prescribed 10-day period, SGT moved the tribunal seeking initiation of insolvency proceedings for a total outstanding amount of Rs 1,11,84,020 as on May 2, 2025.
Baggit cites defective material
In its reply, Baggit admitted receipt of the goods but claimed that materials worth Rs 11,94,845 were found to be defective and unfit for use.
The company contended that the defects were orally communicated to SGT and that, being left with no alternative, it issued a formal written communication dated August 11, 2025, recording the defects. The letter stated that debit notes would be issued for the defective consignments and adjusted against SGT’s account.
Baggit further claimed that despite acknowledging the letter, SGT failed to take any corrective or remedial measures.
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Tribunal finds dispute raised after petition
However, the tribunal observed that the written communication raising the dispute was issued after the insolvency petition had already been filed and therefore did not qualify as a pre-existing dispute under the IBC.
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