# In the matter of Riteway Packaging Private Limited C.P. (IB) No. 193-BB-2020

> NCLT judgment dated 2020-09-02. Citation: TCN-2020-NCLT-00735. The case involves an application filed by N. Jayaraj, Power of Attorney holder of S. Nagarajan,…

- **Court:** NCLT
- **Order date:** 2 Sept 2020
- **Citation:** TCN-2020-NCLT-00735
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/riteway-packaging-private-limited-cp-ib-no-193-bb-2020-e1fbb4da

## Summary

### Background

The case involves an application filed by N. Jayaraj, Power of Attorney holder of S. Nagarajan, Sole Proprietor of M/s. Vijaya Paper Mart (Operational Creditor), under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 6 of the I&B (AAA) Rules, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Riteway Packaging Private Limited (Corporate Debtor). The Operational Creditor claimed a default of Rs. 17,91,483/-, including principal and interest. The Corporate Debtor was incorporated on 17.04.2012 and is engaged in the business of manufacturing paper carton boxes. The Operational Creditor provided duplex board reel materials against several invoices, with some invoices and a debit note remaining due. A demand notice

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## Facts

N. Jayaraj, as Power of Attorney holder for S. Nagarajan of M/s. Vijaya Paper Mart (Operational Creditor), filed a petition to initiate CIRP against M/s. Riteway Packaging Private Limited (Corporate Debtor) for a default of Rs. 17,91,483/-. The Corporate Debtor was incorporated on 17.04.2012 and is engaged in manufacturing paper carton boxes. The Operational Creditor supplied duplex board reel materials against several invoices. Five invoices and one debit note remained due. A demand notice was sent on 27.12.2019 but was returned unclaimed. The Corporate Debtor issued a cheque for Rs. 10,23,604/-, which was dishonored on 10.12.2018 due to insufficient funds. Prior to the demand notice, the Corporate Debtor acknowledged the debt and promised to pay by 05.01.2018 but

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## Issues and analysis

### Issue 1: Whether the petition filed under Section 9 of the IBC for initiation of CIRP is maintainable when …

**Ratio:** The provisions of the Code cannot give any cause of action and cause of action rise with

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**Reasoning:** The Adjudicating Authority observed that the Operational Creditor had not initiated any

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**Interpretation:** The interpretation is that the IBC is not intended to be used as a recovery

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**Application:** In this case, the Operational Creditor's failure to take action under the

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Appellants:** N. Jay…
- **Respondents:** M/s. Riteway…

## Timeline

- **2012-04-17 — Incorporation of…**: M/s. Riteway Packaging Private Limited was…
- **2016-10-21 — Purchase Ord…**: One of the two purchase…

## 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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