# In the matter of Adarsh Global Trades & Services Pvt. Ltd. CP (IB) No. 302-9-HDB-2020

> NCLT judgment dated 2021-08-05. Citation: TCN-2021-NCLT-01436. The case involves a Company Application filed by Agastyadevika Trading and Processing (P) Ltd.…

- **Court:** NCLT
- **Order date:** 5 Aug 2021
- **Citation:** TCN-2021-NCLT-01436
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/adarsh-global-trades-services-pvt-ltd-cp-ib-no-302-9-hdb-2020-649800a9

## Summary

### Background

The case involves a Company Application filed by Agastyadevika Trading and Processing (P) Ltd. (Operational Creditor) under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Adarsh Global Trades and Services (P) Ltd. (Corporate Debtor). The Operational Creditor claimed to have paid an advance of Rs. 7,05,00,000/- for the supply of 5000 MT of Maize, which the Corporate Debtor failed to supply.

## Facts

Agastyadevika Trading and Processing (P) Ltd. (Operational Creditor) filed a Company Application against Adarsh Global Trades and Services (P) Ltd. (Corporate Debtor) under Section 9 of the IBC, 2016. The Operational Creditor claimed to have paid Rs. 7,05,00,000/- as an advance for the supply of 5000 MT of Maize, based on an agreement dated 10.08.2018. The Corporate Debtor failed to supply the maize. The Corporate Debtor contended that the Operational Creditor did not pay the entire amount in advance and that maize prices had increased, making it difficult to supply at the agreed price. The Operational Creditor issued a demand notice on 20.01.2020, which the Corporate Debtor replied to on 10.02.2020, requesting payment of an additional Rs. 50,00,000/- due to the price

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## Issues and analysis

### Issue 1: Whether an advance paid for supply of goods can be considered as an Operational debt within the …

**Ratio:** An advance amount paid for the supply of goods cannot be categorized as an 'Operational

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**Reasoning:** The court relied on precedents from the NCLAT, which have categorically stated that an

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**Interpretation:** The term 'Operational Debt' under Section 5(21) of the IB Code, 2016, is

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**Application:** In this case, the Rs. 7,05,00,000/- paid by the Operational Creditor to the

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## Parties

- **Judges:** Madan B.…; BINOD KUMAR…
- **Appellants:** Agastyadevika…
- **Respondents:** Adarsh Global…

## Timeline

- **2018-08-10 — Agreement for Maize…**: Operational Creditor and Corporate Debtor entered into an agreement for the supply of…
- **N/A — Advance P…**: Operational Creditor paid an…

## 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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