# In the matter of MGF Developments Limited IB-1562-(ND)-2018

> NCLT judgment dated 2019-07-17. Citation: TCN-2019-NCLT-02475. M/s. Ansal Properties & Infrastructure Limited filed a petition under Section 9 of the…

- **Court:** NCLT
- **Order date:** 17 Jul 2019
- **Citation:** TCN-2019-NCLT-02475
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/mgf-developments-limited-ib-1562-nd-2018-b6c4b29a

## Summary

### Background

M/s. Ansal Properties & Infrastructure Limited filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate corporate insolvency resolution process against M/s. MGF Developments Limited. The operational creditor and corporate debtor were handed over a Delhi Metro Rail Corporation (DMRC) site under a concession agreement dated 02.09.2004. An escrow agreement dated 22.06.2005 was executed between the applicant and the respondent for sub-letting shops/available space to third parties and dividing the revenue in a 50:50 ratio.

## Facts

M/s. Ansal Properties & Infrastructure Limited (Operational Creditor) filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) against M/s. MGF Developments Limited (Corporate Debtor) to initiate corporate insolvency resolution process. The Operational Creditor and Corporate Debtor were involved in a concession agreement with Delhi Metro Rail Corporation (DMRC) dated 02.09.2004, where they were to sub-let shops/available space and share revenue in a 50:50 ratio. An escrow agreement was executed on 22.06.2005. The Operational Creditor claimed that the Corporate Debtor failed to transfer their share of the revenue. A demand notice was issued on 24.08.2018 under Section 8 of IBC, 2016. The Corporate Debtor raised objections, citing

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## Issues and analysis

### Issue 1: Whether the claim of the operational creditor falls within the definition of 'operational debt' …

**Ratio:** An 'operational debt' must be owed by the corporate debtor to a creditor who can then be

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**Reasoning:** The Tribunal found that the services were provided to DMRC under the concession

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**Interpretation:** Section 5(21) of the IBC, 2016 defines 'operational debt' as a debt in respect

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**Application:** In this case, the Tribunal determined that the services were rendered to DMRC,

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## Parties

- **Judges:** R. VARADH…; DeepaKr…
- **Appellants:** M/s. Ansal…
- **Respondents:** M/s. MGF Developme…
- **Advocates:** Shruti M…; AMIT M…; +3 more

## Timeline

- **2004-09-02 — Concession Ag…**: Concession agreement between Ansal…
- **2005-06-22 — Escrow Agr…**: Escrow agreement executed between…

## 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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