# In the matter of Charming Apparels Pvt. Ltd. Company Petition no. (IB)-348(ND)-2017

> NCLT judgment dated 2017-12-08. Citation: TCN-2017-NCLT-00086. M/s Rachna Sarees, an operational creditor, filed an application under Section 9 of the…

- **Court:** NCLT
- **Order date:** 8 Dec 2017
- **Citation:** TCN-2017-NCLT-00086
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/charming-apparels-pvt-ltd-company-petition-no-ib-348nd-2017-aa1c4b62

## Summary

### Background

M/s Rachna Sarees, an operational creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, against M/s Charming Apparels Pvt. Ltd., the corporate debtor, for initiation of the Corporate Insolvency Resolution Process (CIRP). The operational creditor claimed that the corporate debtor had defaulted in making payments for the textile items supplied. The application was filed due to an outstanding debt of Rs. 33,02,381/- based on several invoices. The applicant issued a demand notice under Section 8 of the Code, but the corporate debtor neither replied nor made any payment.

## Facts

M/s Rachna Sarees, a sole proprietorship, is an operational creditor involved in the business of selling textile items. M/s Charming Apparels Pvt. Ltd. is the corporate debtor. Rachna Sarees supplied textile items to Charming Apparels. Rachna Sarees raised various invoices to Charming Apparels for the supplies. Charming Apparels failed to clear the invoices, leading to an outstanding amount of Rs. 33,02,381/-. Rachna Sarees issued a demand notice dated 03.07.2017 under Section 8 of the Insolvency and Bankruptcy Code, 2016, requesting Charming Apparels to repay the unpaid operational debt. Charming Apparels neither replied to the demand notice nor made any payment. Rachna Sarees filed an application under Section 9 of the Code for initiation of Corporate Insolvency

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## Issues and analysis

### Issue 1: Whether the applicant qualifies as an 'Operational Creditor' under the Insolvency and Bankruptcy …

**Ratio:** An 'Operational Creditor' is defined under Section 5(20) of the Code as a person to whom

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**Reasoning:** The court observed that the applicant supplied textile items to the respondent company

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**Interpretation:** The definition of 'Operational Creditor' is interpreted to include suppliers of

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**Application:** The applicant, M/s Rachna Sarees, supplied textile items to the respondent, M/s

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## Parties

- **Judges:** Ina Mal…; S. K. MOH…
- **Appellants:** M/s. Rachna…
- **Respondents:** M/s Charming…

## Timeline

- **1991-01-31 — Incorporation of…**: M/s Charming Apparels Pvt. Limited was…
- **2015-05-01 — Business Dist…**: Business of respondent Company was highly disturbed and irregular and finally stopped in…

## 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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