# In the matter of Divya Spinning Mills (P) Ltd. IBA-1235-2019

> NCLT judgment dated 2021-11-01. Citation: TCN-2021-NCLT-00625. The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 1 Nov 2021
- **Citation:** TCN-2021-NCLT-00625
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/divya-spinning-mills-p-ltd-iba-1235-2019-ca471085

## Summary

### Background

The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by OPG Power Generation Private Limited (Operational Creditor) against Divya Spinning Mills (P) Ltd. (Corporate Debtor) to initiate Corporate Insolvency Resolution Process (CIRP). The Operational Creditor claimed a default in payment of dues for power supplied to the Corporate Debtor. The application was filed due to an outstanding debt of Rs. 71,70,818/-, including principal and interest. The Corporate Debtor acknowledged the debt but sought a waiver of the interest amount and an extension of time to pay the dues.

## Facts

OPG Power Generation Private Limited (Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Divya Spinning Mills (P) Ltd. (Corporate Debtor). The Operational Creditor and Corporate Debtor entered into a Power Supply Agreement dated 2018-04-18. The Operational Creditor supplied power and raised invoices periodically. The Corporate Debtor made payments with delays. The Operational Creditor claimed an outstanding debt of Rs. 71,70,818/-, including Rs. 66,02,868/- towards principal and Rs. 5,67,949/- towards interest at 36% p.a. A demand notice was issued on 2019-08-07. The Corporate Debtor replied on 2019-08-22, admitting the outstanding amount of Rs.

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## Issues and analysis

### Issue 1: Whether the application filed by the Operational Creditor under Section 9 of the Insolvency and …

**Ratio:** Section 9(5) of the IBC, 2016, allows for the admission of an application if a default

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**Reasoning:** The court reasoned that the Corporate Debtor admitted its liability for the outstanding

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**Interpretation:** Section 9 of the IBC allows an operational creditor to initiate CIRP if a

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**Application:** The Corporate Debtor admitted to owing a substantial portion of the principal

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## Parties

- **Judges:** R. Sucha…; Anil Ku…
- **Respondents:** M/s Divya…
- **Advocates:** Aparjitha…; Kolanda…

## Timeline

- **1997-05-28 — Incorporation of…**: Divya Spinning Mills (P)…
- **2018-04-18 — Power Supply A…**: OPG Power Generation Private Limited and Divya Spinning Mills (P) Ltd. entered into a…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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