# In the matter of BDH Industries Limited Vs. Mars Remedies Private Limited Company Appeal (AT) (Ins) No. 936 of 2020

> NCLAT judgment dated 2022-02-07. Citation: TCN-2022-NCLAT-00644. This case involves an appeal against an order passed by the NCLT, Ahmedabad, regarding a…

- **Court:** NCLAT
- **Order date:** 7 Feb 2022
- **Citation:** TCN-2022-NCLAT-00644
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/bdh-industries-limited-vs-mars-remedies-private-limited-company-appeal-5753d21e

## Summary

### Background

This case involves an appeal against an order passed by the NCLT, Ahmedabad, regarding a Section 9 application filed by BDH Industries Limited against Mars Remedies Private Limited (MRPL). The dispute centers around a Memorandum of Understanding (MOU) entered into between BDH Industries and MRPL on 7.12.2011. BDH Industries claimed it provided funds to MRPL as a loan, making it a financial creditor under the Insolvency and Bankruptcy Code (IBC). MRPL argued that the MOU was a business agreement, not a loan agreement, and the funds were part payment for export orders. The NCLT rejected BDH Industries' application, leading to the appeal.

## Facts

BDH Industries Limited (Appellant) and Mars Remedies Private Limited (MRPL) (Respondent) entered into a Memorandum of Understanding (MOU) on 7.12.2011. Under the MOU, MRPL was to procure export orders in favor of BDH Industries, and BDH Industries would provide funds to MRPL for manufacturing products against these export orders. BDH Industries claimed it provided funds to MRPL as a loan. MRPL sought financial assistance from BDH Industries, as evidenced by a letter dated 27.11.2011, requesting Rs. 50 lakhs for its project. MRPL also sent letters requesting extensions for repayment, including one dated 28th March 2014. MRPL also sent an email dated 13th December 2016, attaching accounts ledger with interest calculation at 15% per year. BDH Industries filed a Section 9

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## Issues and analysis

### Issue 1: Whether the Memorandum of Understanding (MOU) between BDH Industries and Mars Remedies Private …

**Ratio:** The ratio is that the absence of an explicit loan agreement does not preclude the

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**Reasoning:** The court reasoned that while the MOU outlined a business arrangement, the subsequent

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**Interpretation:** The interpretation is that the court looks beyond the formal agreement to the

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**Application:** The court applied this principle by examining the letters and emails exchanged

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## Parties

- **Judges:** Ashok Bh…; Alok Sriv…
- **Appellants:** BDH INDUSTRIES…
- **Respondents:** Mars Remedies…
- **Advocates:** Kairav Tr…; Pavan God…; +1 more

## Timeline

- **2011-12-07 — MOU Exec…**: Memorandum of Understanding (MOU) entered into between BDH Industries and Mars Remedies…
- **2011-11-27 — Financial Assistance…**: MRPL sends a letter to BDH Industries…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61(1) — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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