# In the matter of T. Sreemannarayana Vs. Magnifico Minerals Pvt. Ltd. & Ors. CA (AT) No. 210-2017

> NCLAT judgment dated 2017-12-04. Citation: TCN-2017-NCLAT-00031. The case involves an appeal against an order passed by the Adjudicating Authority (National…

- **Court:** NCLAT
- **Order date:** 4 Dec 2017
- **Citation:** TCN-2017-NCLAT-00031
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/t-sreemannarayana-vs-magnifico-minerals-pvt-ltd-ors-ca-5b7a0f4e

## Summary

### Background

The case involves an appeal against an order passed by the Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, which treated an application under Sections 433, 434, and 439 of the Companies Act, 1956, as an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code). The appellant, a shareholder/director of Sai Balaji Sponge Iron India Pvt. Ltd. (Corporate Debtor), challenged this order. The respondent, Magnifico Minerals Pvt. Ltd. (Operational Creditor), had filed the initial application. The Adjudicating Authority admitted the application, passed an order of moratorium, and appointed an Interim Resolution Professional. The appellant contended that the operational creditor did not comply with the provisions of the

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## Facts

Sai Balaji Sponge Iron India Pvt. Ltd. (Corporate Debtor) entered into a contract with Magnifico Minerals Pvt. Ltd. (Operational Creditor). The entire amount due under the contract was not paid, and post-dated cheques issued by the Corporate Debtor were dishonored. The Operational Creditor issued a legal notice on December 10, 2015, demanding payment of Rs. 4,25,10,464/-. Subsequently, the Operational Creditor filed a Company Petition under Sections 433 & 434 of the Companies Act, 1956, before the High Court of Andhra Pradesh. After the constitution of the Tribunal, the case was transferred to the Adjudicating Authority, Chennai Bench. The Corporate Debtor became aware on July 6, 2017, that the Adjudicating Authority had passed an ex-parte order on June 22, 2017.

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was correct in treating the application under Sections 433 and …

**Ratio:** The ratio is based on the interpretation of Rule 5 of the Transfer Rules, 2016, which

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**Reasoning:** The court reasoned that the Operational Creditor failed to comply with the requirements

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**Interpretation:** The interpretation hinges on the procedural requirements for converting pending

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**Application:** The court applied this reasoning to the facts by noting that the Operational

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## Parties

- **Judges:** S.J. Mukhop…; Bansi Lal…
- **Appellants:** T. Sreemann…
- **Respondents:** Sai Balaji Sponge…; Magnifico…
- **Advocates:** B.B. Pr…; Kishor Kumar…; +1 more

## Timeline

- **2015-12-10 — Legal Notice…**: The 1st Respondent (Operational Creditor) issued a legal notice calling upon the…
- **2016-12-07 — Central Government…**: Central Government issued notification No.…

## 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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