# In the matter of Favourite Fabtech Pvt. Ltd.C.P. (I.B) No. 465-9-NCLT-AHM-2018

> NCLT judgment dated 2020-03-17. Citation: TCN-2020-NCLT-01484. The Wesman Engineering Co. Pvt. Ltd., the Operational Creditor, filed a petition under Section…

- **Court:** NCLT
- **Order date:** 17 Mar 2020
- **Citation:** TCN-2020-NCLT-01484
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/favourite-fabtech-pvt-ltdcp-ib-no-465-9-nclt-ahm-2018-6a7abf82

## Summary

### Background

The Wesman Engineering Co. Pvt. Ltd., the Operational Creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against Favourite Fabtech Pvt. Ltd., the Corporate Debtor, for default in payment of INR 31,08,515.00. The Corporate Debtor was to purchase equipment for a no-bake sand plant from the Operational Creditor. The Operational Creditor supplied the equipment, and invoices were issued. The Corporate Debtor acknowledged the debt in a meeting held on 31.05.2016, agreeing to pay within three days, but failed to do so. The Operational Creditor issued letters requesting payment, but the Corporate Debtor did not comply.

## Facts

The Wesman Engineering Co. Pvt. Ltd. (Operational Creditor) supplied equipment to Favourite Fabtech Pvt. Ltd. (Corporate Debtor) for a no-bake sand plant, pursuant to a purchase order dated 05.06.2012. A confirmation order was issued on 29.06.2012. The terms included a 10% payment after 8 months of successful commissioning against a performance bank guarantee. The equipment was supplied, invoices were issued, and trial runs were conducted. The Corporate Debtor signed commissioning certificates acknowledging satisfactory operation. The Operational Creditor supplied goods through Raj Transport Agency, issuing invoices from 12.11.2012 to 02.05.2013. The total outstanding dues amounted to INR 31,08,515.00, including a principal of INR 10,55,844.00 and interest of INR

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## Issues and analysis

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

**Ratio:** Section 9 of the Insolvency and Bankruptcy Code, 2016 allows an operational creditor to

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**Reasoning:** The Adjudicating Authority considered the material and arguments presented by both

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**Interpretation:** Section 9 provides a mechanism for operational creditors to recover their dues

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**Application:** The Adjudicating Authority found that the Wesman Engineering Co. Pvt. Ltd. had

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## Parties

- **Judges:** Harihar Prakash…; Prasanta Kumar…
- **Appellants:** The Wesman…
- **Respondents:** Favourite Fabtech…

## Timeline

- **2012-06-05 — Purchase…**: Corporate Debtor issued a purchase order bearing No.103 to the Operational Creditor for…
- **2012-06-29 — Confirmatio…**: Confirmation order was issued…

## 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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