Dues on listing fees cannot be recovered under operational debt: NCLAT on dismissing BSE plea

New Delhi: Dues on the listing fees against a company are 'regulatory dues' in nature and cannot be recovered under 'operational debt' through insolvency proceedings, said the National Company Law Appellate Tribunal (NCLAT) while dismissing an appeal by stock exchange BSE.

Listing fees comes under the ambit of 'regulatory dues', which markets regulator Sebi is entitled to recover, and the defaulting company being an entity registered under Sebi is under an obligation to follow the regulations prescribed by the regulator for the recovery of its dues, observed the NCLAT.

"The dues so said are not 'operational dues' but 'regulatory dues'. The Insolvency Law Committee suggests that regulatory dues are not to be recovered under 'operational debt'," observed a two-member NCLAT bench comprising Justice Anant Bijay Singh and Shreesha Merla.

The NCLAT also upheld the order passed by the National Company Law Tribunal (NCLT) on December 31, 2020, which had dismissed the plea of the BSE to initiate insolvency proceedings against KCCL Plastic Ltd.

"We have carefully examined the pleadings of the case and came to the conclusion that no interference is required in the impugned order. Hence, the impugned order dated December 31, 2020, passed by NCLT, Ahmedabad Bench is hereby affirmed. The Appeal is dismissed," said the NCLAT.

The securities of Ahmedabad-based KCCL Plastic Ltd were listed on the trading platform provided by the BSE on October 27, 1993, and as per the listing agreement, it had to pay an annual listing fees (ALF) on or before April 30 every year.

According to BSE, KCCL Plastic made payments of the ALF till the financial year 2013-14 after that it failed to make any payment.

The BSE has raised several invoices of ALF with arrears and KCCL Plastic willfully neglected to remit, the bourses submitted.

A demand note of Rs 10.66 lakh dated March 15, 2019, was dispatched and the respondent refused to acknowledge such service. The Demand Notices that were sent to addresses were returned undelivered bearing end, it added.

Following this, the BSE filed a petition before the NCLT under Section 9 of the Insolvency and Bankruptcy Code claiming an operational debt.

It claimed that ALF constitutes a continuous cause of action and is intrinsically linked to the services enabled and provided by the BSE and continuously availed by KCCL Plastic till 2019 despite such defaults.