# In the matter of Satish Kumar Sethi vs. BASF India Ltd. & Ors. Company Appeal (AT) (Ins) No. 154 of 2023

> NCLAT judgment dated 2023-05-31. Citation: TCN-2023-NCLAT-00474. This appeal challenges the order dated 25.1.2023 passed by the Adjudicating Authority…

- **Court:** NCLAT
- **Order date:** 31 May 2023
- **Citation:** TCN-2023-NCLAT-00474
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/satish-kumar-sethi-vs-basf-india-ltd-ors-company-appeal-d7404c9d

## Summary

### Background

This appeal challenges the order dated 25.1.2023 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi), which initiated a Corporate Insolvency Resolution Process (CIRP) against the corporate debtor Meghaaarika International Pvt. Ltd. based on a section 9 application filed by BASF India Pvt. Ltd., the operational creditor. The appellant, a director in the suspended board of the corporate debtor, argued that the adjudication of the section 9 application was erroneous.

## Facts

Satish Kumar Sethi, a member of the suspended board of directors of Meghaaarika International Pvt. Ltd. (corporate debtor), appealed against an order initiating CIRP based on a section 9 application by BASF India Ltd. (operational creditor). A sale order was issued on 6.1.2020, followed by a purchase order on 8.1.2020. A High Seas Sale Agreement (HSS Agreement) was entered into on 15.1.2020. The corporate debtor claimed issues with the quality of Isobutanol, sending an arbitration notice on 5.3.2020. A Letter of Credit (LC) was opened, but allegedly dishonored due to the operational creditor's failure to submit proper documents. The operational creditor issued a demand notice on 19.10.2020 and filed a section 9 petition on 23.12.2020. The HSS Agreement stipulated

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## Issues and analysis

### Issue 1: Whether the ‘date of default' in payment of the dues for supply of Isobutanol by the operational …

**Ratio:** The date of default is determined by the terms of the contract between the parties,

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**Reasoning:** The court noted that the HSS Agreement, signed after the creation of the LC, specified

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**Interpretation:** Section 10-A of the IBC prohibits the initiation of CIRP for defaults occurring

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**Application:** The court found that the date of default was 60 days from 6.1.2020 (the date of

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## Parties

- **Judges:** Rakesh…; Alok Sriv…
- **Appellants:** Satish Kuma…
- **Respondents:** Meghaaarika…; BASF Indi…

## Timeline

- **2020-01-06 — Sale Ord…**: Sale order issued by the operational…
- **2020-01-08 — Purchase…**: Purchase order placed by the corporate…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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