# In the matter of Mohan Aromatics Pvt. Ltd. CP No. 1288-I&BC-NCLT-MB-MAH-2017

> NCLT judgment dated 2017-10-18. Citation: TCN-2017-NCLT-00270. The case involves a petition filed by a Financial Creditor, Abdullabhai Abdul Kader, against…

- **Court:** NCLT
- **Order date:** 18 Oct 2017
- **Citation:** TCN-2017-NCLT-00270
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/mohan-aromatics-pvt-ltd-cp-no-1288-ibc-nclt-mb-mah-2017-ed9b7bc9

## Summary

### Background

The case involves a petition filed by a Financial Creditor, Abdullabhai Abdul Kader, against Mohan Aromatics Pvt. Ltd., the Corporate Debtor, under Section 7 of the Insolvency & Bankruptcy Code, 2016. The petitioner seeks to initiate Corporate Insolvency Resolution Process (CIRP) based on an outstanding financial debt. Previously, the petitioner had filed a similar petition as an Operational Creditor, which was later withdrawn. The respondent raised objections regarding the maintainability of the petition, citing lack of privity of contract, uncertainty regarding the petitioner's status as a Financial Creditor, and the nature of the debt as not being a 'Financial Debt'. The core of the dispute revolves around Letter of Credit (L/C) facilities extended to Mohan

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## Facts

Abdullabhai Abdul Kader, acting as a 'Financial Creditor', filed a petition to initiate Corporate Insolvency Resolution Process (CIRP) against Mohan Aromatics Pvt. Ltd. under Section 7 of the Insolvency & Bankruptcy Code, 2016. The claim is based on an outstanding financial debt of ₹4,34,79,673/- (Principal) and interest thereon ₹4,48,03,622/-, totaling ₹8,82,83,295/-. The petitioner had previously filed a petition as an 'Operational Creditor' which was withdrawn. The petitioner facilitated the purchase of fabrics for Mohan Aromatics by opening Letters of Credit (L/C) in favor of the supplier. Mohan Aromatics was to pay facilitation costs and interest on the L/C amount. Several L/C agreements were signed, and Mohan Aromatics furnished details of the goods to be

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## Issues and analysis

### Issue 1: Whether there was 'privity of contract' …

**Ratio:** The doctrine of privity of contract generally confines contractual rights and duties to

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**Reasoning:** The court found that the agreements established a connection and relationship between the

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**Interpretation:** The court interpreted the doctrine of privity in the context of modern

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**Application:** The court applied this principle to the facts, finding that the agreements

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## Parties

- **Judges:** M.K. Sh…; Bhaskara Pantula…
- **Appellants:** Abdullabhai Abdul…
- **Respondents:** Mohan Aromatics…

## Timeline

- **2017-06-27 — Order in TCP No.281/I&BP…**: An order was passed by the same bench of NCLT, Mumbai, under the same title, in the…
- **2017-08-07 — Submission of…**: The Petitioner submitted Form No.1 to initiate Corporate Insolvency Resolution Process…

## 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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