# In the matter of Chetan Sharma Vs. Jai Lakshmi Solvents (P) Ltd. & Anr. CA (AT) Nos. 66 to 70-2018

> NCLAT judgment dated 2018-05-10. Citation: TCN-2018-NCLAT-00287. Five operational creditors filed separate applications under Section 9 of the Insolvency and…

- **Court:** NCLAT
- **Order date:** 10 May 2018
- **Citation:** TCN-2018-NCLAT-00287
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/chetan-sharma-vs-jai-lakshmi-solvents-6613244b

## Summary

### Background

Five operational creditors filed separate applications under Section 9 of the Insolvency and Bankruptcy Code, 2016, for initiating the Corporate Insolvency Resolution Process against Swadisht Oils Pvt. Ltd. (Corporate Debtor). The Adjudicating Authority heard these applications and, via a common impugned order dated May 30, 2017, admitted one of the applications under Section 9, passing a moratorium order and appointing an Interim Resolution Professional. The other applications were disposed of accordingly. The Adjudicating Authority forwarded the operative portions of the reasoned order dated May 30, 2017, which are under challenge in these appeals.

## Facts

Five operational creditors filed applications under Section 9 of the Insolvency and Bankruptcy Code, 2016, against Swadisht Oils Pvt. Ltd. (Corporate Debtor) for initiation of the Corporate Insolvency Resolution Process. The Adjudicating Authority admitted one of the applications, leading to a moratorium and appointment of an Interim Resolution Professional. The Corporate Debtor, through its appellant Mr. Chetan Sharma, claimed that Mr. Dinesh Arora, the then Managing Director, fraudulently caused invoices to be raised in the name of the Corporate Debtor, and a Memorandum of Understanding (MOU) was signed between Mr. Arora and the Corporate Debtor, wherein Mr. Arora undertook all the liabilities. The appellant argued that this constituted a novation of contract, making

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## Issues and analysis

### Issue 1: Whether the alleged Memorandum of Understanding between the Corporate Debtor and Mr. Dinesh Arora …

**Ratio:** A novation of contract requires the consent of all parties involved. A unilateral

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**Reasoning:** The tribunal found that the alleged Memorandum of Understanding was never signed by the

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**Interpretation:** The interpretation of contract law requires that all parties to the original

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**Application:** In this case, the MOU was between the Corporate Debtor and Mr. Dinesh Arora,

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## Parties

- **Judges:** S.J. Mukhop…; Bansi Lal…
- **Appellants:** Chetan S…
- **Respondents:** Swadisht Oils Pvt…; Jai Lakshmi…

## Timeline

- **2016-05-19 — Memorandum of…**: Memorandum of Understanding signed between…
- **2017-01-18 — Demand Notice…**: Demand notice under sub-section (1) of Section 8 of the ‘I&B Code' was issued by the said…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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