# 15th Oct 2018 in the matter of Dharam Paul Metal Pvt. Ltd. CP (IB)-16-MB-2018

> NCLT judgment dated 2018-10-15. Citation: TCN-2018-NCLT-00570. The case originates from an application filed under Section 9 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 15 Oct 2018
- **Citation:** TCN-2018-NCLT-00570
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/15th-oct-2018-in-the-matter-of-dharam-paul-metal-pvt-ltd-cp-ib-16-mb-2018-801521fe

## Summary

### Background

The case originates from an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by M/s. Shree Sai Industries Private Limited, an operational creditor, against M/s. Dharam Paul Metal Private Limited, the corporate debtor. The operational creditor claimed that the corporate debtor defaulted on payments for steel and allied materials supplied on request. Despite repeated requests and a demand notice issued under Section 8 of the Code, the debtor failed to make the payment, leading to the filing of the petition for the commencement of the Corporate Insolvency Resolution Process (CIRP).

## Facts

M/s. Shree Sai Industries Private Limited (Operational Creditor) supplied steel and allied materials to M/s. Dharam Paul Metal Private Limited (Corporate Debtor) on request. An invoice dated 2014-10-20 was raised for ₹17,83,771/-, but the debtor did not make the payment. The total amount in default was ₹28,68,695/-, including principal and interest. The operational creditor issued a demand notice under Section 8 of the Insolvency and Bankruptcy Code on 2017-10-27, which was received by the debtor on 2017-11-03. The debtor did not reply to the notice or pay the outstanding amount. The debtor issued a Form C (Declaration of Central Sales Tax) for the same amount claimed by the operational creditor. The operational creditor filed a petition under Section 9 of the Code for

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## Issues and analysis

### Issue 1: Whether the Operational Creditor has established that the nature of Debt is an “Operational …

**Ratio:** Section 5(21) of the Insolvency and Bankruptcy Code defines 'operational debt' as a claim

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**Reasoning:** The court examined the facts and submissions and found that the operational creditor had

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**Interpretation:** The court interpreted Section 5(21) to include debts arising from the supply of

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**Application:** The court applied the definition of 'operational debt' to the facts of the

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## Parties

- **Judges:** M.K. Sh…
- **Appellants:** M/s. Shree Sai…
- **Respondents:** M/s. Dharam Paul…
- **Advocates:** Ishwar…

## Timeline

- **2014-10-20 — Invoice…**: Operational Creditor raised an invoice for…
- **2017-10-27 — Demand N…**: Operational Creditor issued a demand…

## 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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