# In the matter of Janak Dhawan vs. Famous Innovations Digital Creative Pvt. Ltd. & Ors. Company Appeal (AT) (Insolvency) No. 769 of 2019

> NCLAT judgment dated 2019-12-20. Citation: TCN-2019-NCLAT-00001. The case involves an appeal against the initiation of Corporate Insolvency Resolution Process…

- **Court:** NCLAT
- **Order date:** 20 Dec 2019
- **Citation:** TCN-2019-NCLAT-00001
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/janak-dhawan-vs-famous-innovations-digital-creative-pvt-ltd-ors-company-appeal-3ba5395f

## Summary

### Background

The case involves an appeal against the initiation of Corporate Insolvency Resolution Process (CIRP) against ‘M/s Mode Advertising and Marketing Pvt. Ltd.' based on an application filed by ‘M/s Famous Innovations Digital Creative Pvt. Ltd.' (Operational Creditor) under Section 9 of the Insolvency and Bankruptcy Code, 2016. The appellant contested the CIRP, arguing that the agreement cited by the respondent was a partnership agreement entitling them to profit sharing, not an operational debt. Another Operational Creditor, ‘G. H. Prints Pvt. Ltd.', also filed an application under section 9, which was admitted but later recalled. The appellant also entered into a Memorandum of Understanding (MOU) with 'G. H. Prints Pvt. Ltd.' to prevent future insolvency resolution

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## Facts

M/s Famous Innovations Digital Creative Pvt. Ltd. (Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s Mode Advertising and Marketing Pvt. Ltd. The Adjudicating Authority (National Company Law Tribunal), New Delhi Bench II, initiated CIRP against the Corporate Debtor, which was challenged by the Appellant. The Appellant argued that the agreement cited by the Respondent was a partnership agreement, not an operational debt, and that the Respondent was entitled to profit sharing (35%). Another Operational Creditor, G. H. Prints Pvt. Ltd., also filed an application under section 9, which was admitted on 15th October, 2019, but later recalled by

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## Issues and analysis

### Issue 1: Whether the agreement between the parties constitutes an 'Operational Debt' under Section 5(21) of …

**Ratio:** The definition of 'Operational Debt' under Section 5(21) of the I&B Code requires a

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**Reasoning:** The court considered the appellant's argument that the agreement was a partnership

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**Interpretation:** The interpretation of 'Operational Debt' is crucial in determining whether CIRP

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**Application:** In this case, the agreement between the parties was deemed a partnership

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## Parties

- **Judges:** S.J. Mukhop…; Venugop…
- **Appellants:** Janak D…
- **Respondents:** M/s Mode Advertisi…; Famous Innovations…
- **Advocates:** Anuj…; Pranav S…; +3 more

## Timeline

- **2019-12-20 — Application under…**: M/s Famous Innovations Digital Creative Pvt. Ltd. (Operational Creditor) preferred…
- **2019-07-30 — Matter ta…**: Initially, when the matter was taken up on 30th July, 2019, learned counsel for the…

## 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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