# In the matter of My Choice Knit & Apparels Pvt. Ltd. C.P. (IB) No. 136-BB-2018

> NCLT judgment dated 2019-09-18. Citation: TCN-2019-NCLT-01405. The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 18 Sept 2019
- **Citation:** TCN-2019-NCLT-01405
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/my-choice-knit-apparels-pvt-ltd-cp-ib-no-136-bb-2018-16c0404d

## Summary

### Background

The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. My Choice Knit & Apparels Pvt. Ltd. The applicant, M/s. Bannari Amman Spinning Mills Ltd., claimed that the corporate debtor defaulted on a payment of Rs. 1,07,27,295/-, which included principal and interest. The corporate debtor opposed the petition, citing financial distress and MSME status. The Adjudicating Authority initially dismissed the petition, but the NCLAT set aside the order and remitted the case back to the Adjudicating Authority for admission under Section 9 of the I&B Code.

## Facts

M/s. Bannari Amman Spinning Mills Ltd. (Operational Creditor) filed a C.P. (IB) No.136/BB/2018 under Section 9 of the IBC, claiming that M/s. My Choice Knit & Apparels Pvt. Ltd. (Corporate Debtor) defaulted on a payment of Rs. 1,07,27,295/-. The amount included principal and interest at 24% p.a. The Operational Creditor issued a demand notice on 23.03.2017 for Rs.79,57,794/- plus Rs.27,69,501/- as interest. The Corporate Debtor denied the entire amount, claiming a Letter of Credit was opened for Rs.48,80,396/- but was returned due to invoice dates. The Corporate Debtor acknowledged owing Rs.79,57,794/- but was only willing to pay Rs.30,77,398/-, wanting the Operational Creditor to claim Rs.48,80,396/- from the Letter of Credit. The Operational Creditor also served

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## Issues and analysis

### Issue 1: Whether the application under Section 9 of the IBC …

**Ratio:** Section 9 of the IBC allows an operational creditor to initiate CIRP against a corporate

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**Reasoning:** The NCLAT remitted the case back to the Adjudicating Authority with a direction to admit

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**Interpretation:** Section 9 provides the mechanism for operational creditors to trigger the

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**Application:** The NCLAT's direction implies that the application is maintainable, subject to

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## Parties

- **Judges:** Rajeswara Rao…; Ashok Kumar…
- **Appellants:** M/s. Bannari…
- **Respondents:** M/s. My Choice…

## Timeline

- **1989-07-10 — Incorporation of…**: M/s. Bannari Amman Spinning Mills Limited…
- **2009-03-12 — Incorporation of…**: M/s. My Choice Knit and Apparels Private…

## 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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