# In the matter of P. Vijay Kumar Vs. Priya Trading Company & Ors. CA(AT)(Insolvency) 204-2019

> NCLAT judgment dated 2019-09-11. Citation: TCN-2019-NCLAT-00281. The case involves an appeal against the admission of a Corporate Insolvency Resolution…

- **Court:** NCLAT
- **Order date:** 11 Sept 2019
- **Citation:** TCN-2019-NCLAT-00281
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/p-vijay-kumar-vs-priya-trading-company-ors-ca-6511bc19

## Summary

### Background

The case involves an appeal against the admission of a Corporate Insolvency Resolution Process (CIRP) application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code). The application was filed by M/s Priya Trading Company, claiming to be an Operational Creditor, against M/s Veda Biofuel Limited, the Corporate Debtor. The Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, admitted the application, leading to the imposition of a moratorium on the Corporate Debtor's assets and the appointment of an Interim Resolution Professional. The appellant, Shri P. Vijay Kumar, the erstwhile Chairman and Managing Director and a shareholder holding more than 45% of the total shareholding of the Corporate Debtor, challenged the order,

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## Facts

P. Vijay Kumar, the appellant, is the former Chairman and Managing Director of M/s Veda Biofuel Limited, the Corporate Debtor, and holds more than 45% of its shares. M/s Priya Trading Company, the Operational Creditor, filed an application under Section 9 of the I&B Code for initiation of CIRP against the Corporate Debtor, claiming unpaid operational debt for the supply of broken rice and coal. A 'Raw Material Supply Agreement' dated 9th April, 2018 existed. The Operational Creditor issued a demand notice on 5th July, 2018, which the Corporate Debtor replied to on 14th July, 2018, denying liability based on lack of privity of contract. The Corporate Debtor claimed that the raw material was supplied by Arun Agrawal and Annapurna Agrawal, not Priya Trading Company.

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was justified in admitting the application under Section 9 of …

**Ratio:** The ratio is that the existence of a dispute regarding the quantum of liability does not

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**Reasoning:** The court reasoned that the Corporate Debtor's admission of liability to Arun Agrawal and

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**Interpretation:** The interpretation is that Section 9 of the I&B Code allows an Operational

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**Application:** The ratio and reasoning were applied to the facts of the case by noting that

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## Parties

- **Judges:** Bansi Lal…; Balvinder…
- **Appellants:** P. Vijay…
- **Respondents:** M/s Veda Biofuel…; M/s Priya Trading…
- **Advocates:** S.K. Sah…; Raakhi Sa…; +4 more

## Timeline

- **2018-04-09 — Raw Material Supply…**: Raw Material Supply Agreement dated…
- **2018-06-16 — Lawyer's…**: Registered lawyer's notice dated 16th June, 2018 served by the ‘Corporate Debtor' upon…

## 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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