# In the matter of Nitesh Residency Hotels Pvt. Ltd. C.P. (IB) No. 108-BB-2017

> NCLT judgment dated 2019-05-10. Citation: TCN-2019-NCLT-03331. The case involves an application filed by M/s. Posterscope Outdoor Advertising Pvt. Ltd.…

- **Court:** NCLT
- **Order date:** 10 May 2019
- **Citation:** TCN-2019-NCLT-03331
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/nitesh-residency-hotels-pvt-ltd-cp-ib-no-108-bb-2017-9f6ac951

## Summary

### Background

The case involves an application filed by M/s. Posterscope Outdoor Advertising Pvt. Ltd. ('Applicant/Operational Creditor') under Section 9 of the IBC, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Nitesh Residency Hotels Private Limited ('Respondent/Corporate Debtor'). The application is based on the ground that the Corporate Debtor committed a default for a total outstanding amount of Rs.6,57,500/-. The Corporate Debtor and its Sister Concerns had entered into Agreements with the Applicant for provision of advertising services. In 2015, the Corporate Debtor and its Sister Concerns collectively owed the Applicant Rs.1,87,32,290/-. Despite demands, the Corporate Debtor and its Sister Concerns failed to remit the dues and

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## Facts

M/s. Posterscope Outdoor Advertising Pvt. Ltd. (Applicant) filed CP(IB) No.108/BB/2017 under Section 9 of the IBC, 2016, against M/s. Nitesh Residency Hotels Pvt. Ltd. (Respondent/Corporate Debtor) for a default of Rs.6,57,500/-. The Applicant and Respondent had a business relationship involving outdoor advertising services. An outstanding amount of Rs.1,87,32,290/- was payable to the Applicant by Nitesh Estates for services rendered. Nitesh Estates disputed this amount, terminated the contracts, and filed a winding-up petition against the Applicant in the Bombay High Court. This dispute was settled via a settlement agreement dated 05.12.2016, where the Respondent agreed to pay Rs.65,00,000/-. The Respondent paid Rs.35,00,000/- but failed to pay the remaining amount.

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## Issues and analysis

### Issue 1: Whether the claim made by the Petitioner …

**Ratio:** The IBC, 2016 is intended for the resolution of insolvency and not merely for the

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**Reasoning:** The NCLT observed that the application was instituted with an intention to recover the

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**Interpretation:** The IBC is not meant to be used as a recovery mechanism for debts, especially

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**Application:** The NCLT found that the Applicant was attempting to use the IBC to recover a

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## Parties

- **Judges:** Rajeswara Rao…
- **Appellants:** M/s. Posterscope…
- **Respondents:** M/s. NiteshResiden…
- **Advocates:** Sahana Deva…; Uday Sh…

## Timeline

- **2016-12-05 — Settlement Ag…**: Corporate Debtor and its Sister Concerns executed a Settlement Agreement whereby they…
- **2016-12-15 — Order in CP N…**: Order recorded in CP…

## 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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