# In the matter of Supreme Transport Organization Pvt. Ltd. vs. Maharashtra Airport Development Company Ltd.

> NCLAT judgment dated 2023-08-23. Citation: TCN-2023-NCLAT-00259. The appeal was filed against the order dated 17.05.2023 passed by the Adjudicating Authority…

- **Court:** NCLAT
- **Order date:** 23 Aug 2023
- **Citation:** TCN-2023-NCLAT-00259
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/supreme-transport-organization-pvt-ltd-vs-maharashtra-airport-development-compan-ad601458

## Summary

### Background

The appeal was filed against the order dated 17.05.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench-I, which rejected the Appellant's Section 9 application, holding that there was no operational debt. The Appellant had applied for a tender issued by 'Maharashtra Airport Development Company Limited' and submitted an earnest money deposit (EMD) of Rs.5 Lakhs and Rs.2 Lakhs. Both tenders were rejected on 29.08.2018 and 30.08.2018. The Appellant claimed that their EMD was not refunded, leading to the filing of the Section 9 application. The Adjudicating Authority concluded that the EMD deposit, in pursuance of the tender notice, did not constitute an operational debt.

## Facts

Supreme Transport Organization Pvt. Ltd. filed an appeal against the order of the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench-I, which rejected their Section 9 application. The appellant had applied for a tender issued by Maharashtra Airport Development Company Ltd. and deposited earnest money (EMD) of Rs.5 Lakhs and Rs.2 Lakhs. The tenders were rejected on 29.08.2018 and 30.08.2018. The appellant claimed that the EMD was not refunded, leading to the Section 9 application. The Adjudicating Authority ruled that the EMD deposit was not an operational debt. The appellant argued that the EMD should be considered an advance payment and thus an operational debt, relying on a Supreme Court judgment. The court distinguished the facts, noting the

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## Issues and analysis

### Issue 1: Whether the deposit of Earnest Money Deposit (EMD) by a tenderer, whose tender was rejected, …

**Ratio:** An operational debt requires a nexus with the provision of goods or services. The

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**Reasoning:** The court reasoned that the Appellant was merely a tenderer whose tender was rejected.

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**Interpretation:** The court interpreted Section 5(21) of the IBC to mean that an operational debt

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**Application:** In this case, the Appellant's EMD was not considered an operational debt

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## Parties

- **Judges:** Ashok Bh…; Barun M…
- **Appellants:** Supreme Transport…
- **Respondents:** Maharashtra…

## Timeline

- **2018-08-29 — Tender Rej…**: One of the Appellant's…
- **2018-08-30 — Tender Rej…**: The second of the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(21) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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