# In the matter of Prajay Engineers Syndicate Limited CP (IB) No. 741-9-HDB-2019

> NCLT judgment dated 2021-01-06. Citation: TCN-2021-NCLT-03383. Ingersoll Rand Climate Solutions Private Limited, the Operational Creditor, filed a petition…

- **Court:** NCLT
- **Order date:** 6 Jan 2021
- **Citation:** TCN-2021-NCLT-03383
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/prajay-engineers-syndicate-limited-cp-ib-no-741-9-hdb-2019-9b97056a

## Summary

### Background

Ingersoll Rand Climate Solutions Private Limited, the Operational Creditor, filed a petition against Prajay Engineers Syndicate Limited, the Corporate Debtor, under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) due to an alleged operational debt of Rs. 6,63,118/-. The Operational Creditor claimed that the debt arose from an Annual Maintenance Contract (AMC) services provided to the Corporate Debtor. The Corporate Debtor contested the claim, asserting that there was no operational debt as defined under the IBC and that the Operational Creditor had breached its obligations under the AMC agreement.

## Facts

Ingersoll Rand Climate Solutions Private Limited (Operational Creditor) claimed that Prajay Engineers Syndicate Limited (Corporate Debtor) owed them Rs. 6,63,118/- due to unpaid invoices for Annual Maintenance Contract (AMC) services. The Operational Creditor stated that the debt became due with 18% interest p.a. from 20.08.2016. The Corporate Debtor argued that there was no operational debt as defined under the IBC, and that the Operational Creditor had breached its obligations under the AMC agreement. The Corporate Debtor also contended that the petition was filed by a Power of Attorney holder without specific authorization for initiating CIRP. The Operational Creditor submitted a purchase order dated 25.02.2016 as evidence of the AMC agreement, but failed to provide

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## Issues and analysis

### Issue 1: Whether there is an 'operational debt' as defined under Section 4 of the I&B Code, exceeding …

**Ratio:** The existence of an operational debt is a prerequisite for initiating CIRP under Section

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**Reasoning:** The NCLT found that the Operational Creditor failed to provide sufficient evidence to

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**Interpretation:** The term 'operational debt' is strictly construed under the IBC. The burden of

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**Application:** In this case, the Operational Creditor failed to provide sufficient evidence to

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## Parties

- **Judges:** K. Anantha…; Veera Brahma Rao…
- **Appellants:** Ingersoll Rand…
- **Respondents:** Prajay Engineers…

## Timeline

- **2016-02-25 — Purchase Ord…**: Corporate Debtor placed purchase order for…
- **2016-05-23 — Invoice…**: Invoice No.185124 was…

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