# In the matter of Suresh Khola vs. Abdulhadi Almailem Trading Company & Ors.

> NCLAT judgment dated 2023-10-10. Citation: TCN-2023-NCLAT-00135. This appeal challenges an order dated July 31, 2023, passed by the Adjudicating Authority…

- **Court:** NCLAT
- **Order date:** 10 Oct 2023
- **Citation:** TCN-2023-NCLAT-00135
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/suresh-khola-vs-abdulhadi-almailem-trading-company-ors-00f5e8cf

## Summary

### Background

This appeal challenges an order dated July 31, 2023, passed by the Adjudicating Authority (NCLT, New Delhi, Court No. III), which admitted an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, for the resolution of an amount of Rs. 303,320,671/-, declared a moratorium, and appointed an Interim Resolution Professional.

## Facts

The Appellant (Corporate Debtor) appointed the Respondent (Operational Creditor) as a sole distributor for JATL Branded products in Kuwait, Oman, Bahrain, and the Kingdom of Saudi Arabia through a distribution agreement dated February 1, 2018. This agreement, valid for 60 months, granted the Respondent the right to purchase and resell these batteries. Clause 2.3.3 of the agreement stipulated that JATL would send a quality person to inspect failures if they exceeded 5% and would replace all model-wise defective batteries above this threshold. Clause 7.2 further provided that in case of a breach, the aggrieved party could claim specific performance or terminate the agreement and seek damages. Complaints arose regarding the quality of batteries sold by the Appellant to

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## Issues and analysis

### Issue 1: Whether the application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by the …

**Ratio:** An application under Section 9 of the IBC for the recovery of an amount paid for

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**Reasoning:** The NCLAT found that the agreement between the parties, specifically Clause 7.2, provided

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**Interpretation:** The court interpreted 'operational debt' under Section 5(21) of the IBC in the

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**Application:** In this case, the Respondent's claim was for the refund of money paid for

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## Parties

- **Judges:** Rakesh Kuma…; Naresh Sa…
- **Appellants:** Suresh…
- **Respondents:** Abdulhadi…; Nazim…
- **Advocates:** Krishnendu…; Abhijeet…; +15 more

## Timeline

- **February 1, 2018 — Distribution A…**: Appellant (Corporate Debtor) appointed Respondent (Operational Creditor) as sale…
- **September 3, 2019 — Minutes of…**: A physical inspection was conducted due to complaints about battery quality, and minutes…

## 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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