# In the matter of Rajasthan Drugs and Pharmaceuticals Ltd. (IB)-324-9-JPR-2019

> NCLT judgment dated 2021-11-11. Citation: TCN-2021-NCLT-00533. M/s. ATE Projects Pvt. Ltd., the Operational Creditor, filed a petition under Section 9 of the…

- **Court:** NCLT
- **Order date:** 11 Nov 2021
- **Citation:** TCN-2021-NCLT-00533
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/rajasthan-drugs-and-pharmaceuticals-ltd-ib-324-9-jpr-2019-a0269463

## Summary

### Background

M/s. ATE Projects Pvt. Ltd., the Operational Creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Rajasthan Drugs and Pharmaceuticals Ltd., the Corporate Debtor. The Operational Creditor claimed that the Corporate Debtor had defaulted on payments for work done and materials supplied under various purchase orders and work orders issued in 2015 and 2016. The Corporate Debtor opposed the application, citing the existence of an arbitration clause in the agreements and disputing the amounts claimed. The Corporate Debtor also argued that it was a government company and was undergoing closure as per the decision of the Government of India.

## Facts

M/s. ATE Projects Pvt. Ltd. (Operational Creditor) filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) against M/s. Rajasthan Drugs and Pharmaceuticals Ltd. (Corporate Debtor) for an outstanding operational debt of Rs. 2,98,79,294.12. The Operational Creditor claimed that the Corporate Debtor had issued purchase orders and work orders in 2015 for HVAC, dust extraction, civil, electrical, and plumbing works worth Rs. 5,38,50,590. A separate agreement was made between the parties. The Operational Creditor deposited a security amount of Rs. 5,12,000 and started work after receiving an advance payment of Rs. 38,60,604 against a Bank Guarantee. The Operational Creditor submitted running bills from 06.04.2016 to 10.09.2016, but no payments were

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## Issues and analysis

### Issue 1: Whether the application under Section 9 of the IBC is maintainable given the existence of an …

**Ratio:** Section 238 of the IBC has an overriding effect over other laws, including the

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**Reasoning:** The court reasoned that Section 238 of the IBC gives it overriding effect over the

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**Interpretation:** Section 238 of the IBC is interpreted to mean that the provisions of the IBC

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**Application:** The court applied the ratio by stating that the arbitration clause in the

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## Parties

- **Judges:** Ajay Kumar…; L. N. G…
- **Appellants:** M/s. ATE Projects…
- **Respondents:** M/s. Rajasthan…

## Timeline

- **2015-01-01 — Corporate Debtor…**: The Corporate Debtor invited tenders for various works, against which the Applicant…
- **2015-12-04 — Contract A…**: The Corporate Debtor awarded the contract to the Applicant vide letter dated 04.12.2015,…

## 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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