# In the matter of National Plywood Industries Ltd. IA No. 52 of 2020 in C.P. (IB) No. 09-GB-2018

> NCLT judgment dated 2020-11-27. Citation: TCN-2020-NCLT-00199. The case involves a dispute over the classification of debt in a Corporate Insolvency…

- **Court:** NCLT
- **Order date:** 27 Nov 2020
- **Citation:** TCN-2020-NCLT-00199
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/national-plywood-industries-ltd-ia-no-52-of-2020-in-cp-ib-no-09-gb-2018-1c22272d

## Summary

### Background

The case involves a dispute over the classification of debt in a Corporate Insolvency Resolution Process (CIRP). Meghalaya Forest Products (MFP), the Petitioner/Applicant, sought to be classified as a Financial Creditor of National Plywood Industries Ltd. (NPIL), the Corporate Debtor. The Resolution Professional (RP), Sandeep Khaitan, initially admitted MFP's claim as both operational and financial creditor, but later reclassified it as solely an operational creditor. MFP challenged this reclassification, arguing that a portion of the debt should be considered a financial loan based on a letter indicating an agreement to transfer a sum to a loan account with interest. The Corporate Debtor is under CIRP from 26.08.2019.

## Facts

Meghalaya Forest Products (MFP) claimed to be a creditor of National Plywood Industries Ltd. (NPIL), the Corporate Debtor, for Rs.1.73 Crores, arising from the supply of goods. MFP initially filed a claim as both operational and financial creditor. The Resolution Professional (RP) initially admitted the claim but later reclassified MFP as an Operational Creditor. MFP challenged this reclassification, arguing that Rs.60,00,000 of the total amount should be considered a financial loan based on a letter dated 26.06.2019 indicating an agreement to transfer this sum to a loan account with 12% interest. The RP argued that the debt was against supply of goods and not for any sum lent by MFP to NPIL. The Corporate Debtor is under CIRP from 26.08.2019. The RP's transaction

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## Issues and analysis

### Issue 1: Whether the Petitioner/Applicant, Meghalaya Forest Products, should be reclassified as a Financial …

**Ratio:** The classification of a creditor as either financial or operational depends on the nature

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**Reasoning:** The Tribunal observed that the Petitioner supplied goods to the Corporate Debtor. While

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**Interpretation:** The interpretation of Section 5(8) of the IBC defines financial debt,

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**Application:** In this case, the Tribunal applied the ratio and reasoning to the specific

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## Parties

- **Judges:** H. V.…; Prasanta Kumar…; +1 more
- **Appellants:** Meghalaya Forest…
- **Respondents:** National Plywood…; Stressed Assets…

## Timeline

- **2019-08-26 — CIRP Commen…**: Corporate Debtor is under CIRP from this date as per the Order of the Adjudicating…
- **2019-11-23 — Claim Fi…**: Petitioner/Applicant filed Form -C with the Respondent No.2 for a claim of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 25(j) — Duties of resolution professional](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-25)

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