# M/s Daaksh Jute LLP vs. M/s. Karnataka Food and Civil Suppliers Corporation Limited

> NCLT judgment dated 2026-10-12. Citation: TCN-2026-NCLT-01239. Daaksh Jute LLP (Operational Creditor/Petitioner) filed a petition under Section 9 of the IBC,…

- **Court:** NCLT
- **Order date:** 12 Oct 2026
- **Citation:** TCN-2026-NCLT-01239
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-bengaluru/karnataka-food-and-civil-suppliers-corporation-limited-9ebe6

## Summary

### Background

Daaksh Jute LLP (Operational Creditor/Petitioner) filed a petition under Section 9 of the IBC, 2016, seeking to initiate CIRP against Karnataka Food and Civil Suppliers Corporation Limited (Corporate Debtor/Respondent) for an operational debt of Rs.19,25,01,796.48. The debt arose from the supply of jute gunny bags under two work orders. The Corporate Debtor, a State Government Company, disputed the claim, arguing it performs sovereign functions, the procurement violated the Karnataka Transparency in Public Procurements Act (KTPP Act) due to lack of price discovery and government approval, and that the contract was unlawful and void ab initio. The CD also disputed the interest component and claimed to be a solvent company.

## Facts

Daaksh Jute LLP (OC) filed a petition under Section 9 of IBC, 2016, against Karnataka Food and Civil Suppliers Corporation Limited (CD).

The alleged operational debt is Rs.19,25,01,796.48, including a principal amount of Rs.14,55,63,931, interest at 24% p.a., and a security deposit of Rs.93,24,145.71.

The date of default is 03.08.2024.

The OC is an MSME engaged in the manufacture and supply of jute gunny bags.

The CD, a State Government Company, invited a tender on 18.12.2023 for jute gunny bags, in which the OC participated as the L2 bidder.

On 15.04.2024, the CD informed the OC that the L1 bidder's contract was terminated and the CD intended to procure bags from the OC.

The OC communicated its willingness to supply on 16.04.2024.

…

## Issues and analysis

### Issue 1: Whether Corporate Insolvency Resolution Process (CIRP) can be initiated against the Corporate …

**Ratio:** A government company incorporated under the Companies Act, whose functions can be

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**Reasoning:** The NCLT distinguished the Supreme Court's ruling in `Hindustan Construction Company Ltd

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**Interpretation:** The definition of 'corporate person' under Section 3(7) of the IBC is broad and

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**Application:** Since Karnataka Food and Civil Suppliers Corporation Limited is a State

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## Parties

- **Judges:** Sunil Kumar…; Radhakrishna…
- **Appellants:** M/s Daaksh Jute…; Daaksh Ju…
- **Respondents:** Karnataka Food…; M/s. Karnataka…
- **Other parties:** Committee of…; Sh Addanki…
- **Advocates:** D.N. Sh…; Ranganatha…; +2 more

## Timeline

- **2023-12-18 — Tender Invi…**: Corporate Debtor invited tender…
- **2024-04-15 — CD's Intent to…**: Corporate Debtor informed Operational Creditor that L1 bidder's contract was terminated…

## 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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