# In the matter of Prostar Textile Mills Private Limited IBA-16-2020

> NCLT judgment dated 2021-01-28. Citation: TCN-2021-NCLT-03209. The case involves an application filed by Chitra Devi, the sole proprietor of M/s. Mars…

- **Court:** NCLT
- **Order date:** 28 Jan 2021
- **Citation:** TCN-2021-NCLT-03209
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/prostar-textile-mills-private-limited-iba-16-2020-95c2cdba

## Summary

### Background

The case involves an application filed by Chitra Devi, the sole proprietor of M/s. Mars Colours, as an Operational Creditor, against M/s. Prostar Textile Mill Private Ltd., the Corporate Debtor. The application seeks the initiation of the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Operational Creditor claims a total sum of Rs. 41,14,521/- under 48 invoices for the supply of chemicals to the Corporate Debtor, along with interest at 24% per annum from the due date of the respective invoices until 31.07.2019. The Corporate Debtor remained absent despite repeated notices.

## Facts

Chitra Devi, the sole proprietor of M/s. Mars Colours, filed an application as an Operational Creditor against M/s. Prostar Textile Mill Private Ltd., the Corporate Debtor, under Section 9 of the Insolvency and Bankruptcy Code, 2016. The claim amounted to Rs. 41,14,521/- based on 48 unpaid invoices for the supply of chemicals. The Corporate Debtor acknowledged the debt and requested time to make payments. The date of incorporation of the Corporate Debtor is 29.10.2015. The Corporate Debtor failed to appear before the Tribunal despite repeated notices. The Operational Creditor supplied chemicals for dyeing purposes to the Corporate Debtor, which is engaged in the textile manufacturing business. The Corporate Debtor also provided confirmation of balance to the

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## Issues and analysis

### Issue 1: Whether the application filed by the Operational Creditor is maintainable under Section 9 of the …

**Ratio:** Section 9 of the IBC allows an operational creditor to initiate CIRP against a corporate

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**Reasoning:** The Tribunal perused the records and found that the Operational Creditor had submitted

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**Interpretation:** Section 9 provides a mechanism for operational creditors to recover their dues

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**Application:** The Tribunal applied Section 9 to the facts of the case and determined that the

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## Parties

- **Judges:** R. VARADH…; Anil Ku…
- **Appellants:** Chitra…
- **Respondents:** Prostar Textile…; Prostar Textiles…

## Timeline

- **2015-10-29 — Date of Incor…**: The Corporate Debtor, Prostar Textile Mill…
- **2019-07-31 — Interest Calc…**: Interest calculated at 24% per annum from the due date of the respective invoices, till…

## 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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