# In the matter of Parabolic Drugs Ltd. CA 206-2019 in C.P. (IB)-102-CHD-2018

> NCLT judgment dated 2019-04-26. Citation: TCN-2019-NCLT-03685. M/s. Sun Pharmaceutical Industries Ltd. filed an application seeking directions to lift raw…

- **Court:** NCLT
- **Order date:** 26 Apr 2019
- **Citation:** TCN-2019-NCLT-03685
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/parabolic-drugs-ltd-ca-206-2019-in-cp-ib-102-chd-2018-c1be124d

## Summary

### Background

M/s. Sun Pharmaceutical Industries Ltd. filed an application seeking directions to lift raw materials in the possession of the Corporate Debtor, M/s. Parabolic Drugs Ltd., which is under the control of the Resolution Professional. Weather Makers Pvt. Ltd. had initiated CIRP against Parabolic Drugs Ltd. under Section 9 of IBC, and a moratorium was declared. Sun Pharmaceutical Industries Ltd. had a manufacturing agreement with Parabolic Drugs Ltd. to manufacture a drug (Cefaclor), with Sun Pharmaceutical supplying the raw materials. Sun Pharmaceutical sought the return of the raw materials, arguing that they were not 'essential supplies' and that Section 14 of IBC did not apply. The CoC had previously voted against releasing the goods.

## Facts

M/s. Sun Pharmaceutical Industries Ltd. (Sun Pharma) filed an application to lift raw materials from M/s. Parabolic Drugs Ltd. (Parabolic Drugs), which is undergoing Corporate Insolvency Resolution Process (CIRP). Weather Makers Pvt. Ltd. initiated CIRP against Parabolic Drugs under Section 9 of the Insolvency and Bankruptcy Code (IBC). A moratorium was imposed under Section 14 of IBC. Sun Pharma and Parabolic Drugs had a 'Manufacturing & Supply Agreement' dated 2010-02-11, where Parabolic Drugs would manufacture a drug (Cefaclor) for Sun Pharma, with Sun Pharma supplying the raw materials. Sun Pharma supplied raw materials worth ₹14.01 crores and ₹20.10 crores between January 2016 and October 2018. Sun Pharma was not allowed to visit the manufacturing unit after

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## Issues and analysis

### Issue 1: Whether the raw material in possession of the Corporate Debtor should be allowed to be returned on …

**Ratio:** Section 18(1)(f) of the IBC mandates the Interim Resolution Professional to take control

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**Reasoning:** The court reasoned that the raw material was supplied under a contractual arrangement,

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**Interpretation:** The court interpreted Section 18(1)(f) r/w its explanation to mean that assets

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**Application:** The court applied this interpretation to the facts, noting that Sun Pharma

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## Parties

- **Judges:** M.K. Sh…; Pradeep R.…
- **Appellants:** Sun Pharmaceutical…
- **Respondents:** Parabolic Drugs…

## Timeline

- **2018-08-30 — CIRP Init…**: A Petition u/s 9 of IBC was submitted by Weather Makers Pvt. Ltd. against Parabolic Drugs…
- **2010-02-11 — Manufacturing…**: Sun Pharmaceutical Industries Ltd. entered into a "Manufacturing & Supply Agreement”…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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