Baggit India to undergo insolvency process after failing to pay Rs 1.11 cr

The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted a Section 9 insolvency plea against Baggit India Private Limited, initiating the corporate insolvency resolution process (CIRP) over an alleged operational debt of ₹1.11 crore.

The petition was filed by Sunrise Global Tradelinks, a proprietary concern engaged in sourcing and supplying raw materials used in handbags and purses. The operational creditor claimed that Baggit had defaulted on payments for goods supplied under four purchase orders dated March 15, 2025. The materials included PVC leathercloth, embroidery strips, metal chains, magnetic buttons and polyester knitted fabrics.

According to the order pronounced on February 27, 2026, the total outstanding claimed was ₹1,11,84,020 as of May 2, 2025. Invoices were raised on May 1, 2025, stipulating immediate payment. Despite reminder letters and a demand notice issued under Section 8 of the Insolvency and Bankruptcy Code (IBC) on July 17, 2025, the dues remained unpaid.

Baggit opposed the plea, arguing that goods worth ₹11.94 lakh were defective and unfit for use. The company contended that it had communicated the defects and intended to issue debit notes to adjust the amount. It further argued that after deducting the disputed sum, the remaining amount would fall below the ₹1 crore threshold prescribed under Section 4 of the IBC for initiating insolvency proceedings.

However, the tribunal rejected the defence of a “pre-existing dispute”. The bench observed that the only written communication raising objections to the quality of goods was dated August 11, 2025 — after the insolvency application had already been filed on July 31, 2025. The tribunal noted that no test reports were produced and that the dispute appeared to be an afterthought.

Relying on judicial precedents that hold disputes raised after issuance of a demand notice cannot qualify as pre-existing disputes, the bench concluded that the defence was a “moonshine” one. It held that the operational debt exceeding ₹1 crore was due and payable and that default had been established.

Accordingly, the tribunal declared a moratorium under Section 14 of the IBC and appointed Amit Vijay Karia as the interim resolution professional (IRP). The operational creditor has been directed to deposit ₹3 lakh towards initial CIRP costs. The IRP will now take over the management of the company and invite claims from creditors as part of the resolution process.

Baggit India Private Limited, incorporated on November 4, 2008, is a Mumbai-based company engaged in the design, manufacture and sale of handbags and fashion accessories. The company has its registered office at Narayan Udyog Bhavan, Lalbaug, Mumbai, and operates in the domestic retail fashion segment, supplying products through various distribution channels.

The company was started by Nina Lekhi, who is also the managing director of the company.

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