# In the matter of Prayag Tubes Pvt. Ltd. IB-2923-ND-2019

> NCLT judgment dated 2021-03-04. Citation: TCN-2021-NCLT-02816. Prayag Polytech Private Limited filed an application under Section 9 of the Insolvency and…

- **Court:** NCLT
- **Order date:** 4 Mar 2021
- **Citation:** TCN-2021-NCLT-02816
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/prayag-tubes-pvt-ltd-ib-2923-nd-2019-0c2dc4b4

## Summary

### Background

Prayag Polytech Private Limited filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, against Prayag Tubes Pvt. Ltd. seeking to initiate the Corporate Insolvency Resolution Process (CIRP) for an alleged default of Rs. 9,10,155/- plus interest. The applicant claimed to have supplied materials to the respondent, raising invoices totaling Rs. 13,78,404/-, out of which Rs. 6,62,944/- was received, leaving a balance of Rs. 7,15,460/-. The last payment received was on 31.03.2018. A demand notice was issued on 09.08.2019, claiming Rs. 8,78,930/- including interest. The respondent contended that the amount claimed had been adjusted against a loan availed by the applicant from Prayag Polymers Private Limited, a sister concern of the respondent. The

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## Facts

Prayag Polytech Private Limited (the applicant/operational creditor) claimed that Prayag Tubes Pvt. Ltd. (the respondent/corporate debtor) defaulted on payments for materials supplied. The total amount of invoices raised was Rs. 13,78,404/-, with Rs. 6,62,944/- paid, leaving a balance of Rs. 7,15,460/-. The last payment was received on 31.03.2018. A demand notice was issued on 09.08.2019 for Rs. 8,78,930/- (including interest). The respondent argued that the outstanding amount was adjusted against a loan of Rs. 1,00,00,000/- availed by the applicant from Prayag Polymers Pvt. Ltd., a sister concern of the respondent. The respondent submitted letters dated 29.11.2018 and 30.11.2018, acknowledging the adjustment. The applicant denied availing any loan and disputed the

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## Issues and analysis

### Issue 1: Whether the applicant established an operational debt and default as required under Section 9 of …

**Ratio:** To trigger Section 9 of the IBC, 2016, the applicant must establish an operational debt

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**Reasoning:** The court found that the debt had been adjusted by the corporate debtor, as evidenced by

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**Interpretation:** Section 9 of the IBC requires the establishment of both an operational debt and

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**Application:** In this case, the court found that the debt had been adjusted, negating the

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## Parties

- **Judges:** SHRI. P.S.N.…; V.K. SUB…
- **Appellants:** Prayag Polytech…
- **Respondents:** Prayag Tubes Pvt.…

## Timeline

- **2018-03-31 — Last Payment…**: The applicant received the last payment…
- **2019-08-09 — Demand Notice…**: The applicant issued a statutory demand notice under section 8 of IBC, 2016, demanding a…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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