# In the matter of Royal Agro Green Food Industries Pvt. Ltd. CP No. 1326-IBC-NCLT-MB-MAH-2017

> NCLT judgment dated 2018-04-03. Citation: TCN-2018-NCLT-01609. Saba Bahar Iranian Company, an operational creditor, filed a petition under Section 9 of the…

- **Court:** NCLT
- **Order date:** 3 Apr 2018
- **Citation:** TCN-2018-NCLT-01609
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/royal-agro-green-food-industries-pvt-ltd-cp-no-1326-ibc-nclt-mb-mah-2017-622db211

## Summary

### Background

Saba Bahar Iranian Company, an operational creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against M/s. Royal Agro Green Food Industries Pvt. Ltd., the corporate debtor, due to non-payment of dues for the supply of yellow corn. The petitioner claimed to have placed an order for 12,500 MT of yellow corn worth Rs. 22.35 crores. Despite various agreements and extensions, the corporate debtor failed to supply the goods or return the advance payment.

## Facts

Saba Bahar Iranian Company (Operational Creditor) placed an order for 12,500 MT of Yellow Corn worth Rs. 22.35 crores with M/s. Royal Agro Green Food Industries Pvt. Ltd. (Corporate Debtor). The Corporate Debtor agreed to export and supply the corn as per a Performa Invoice dated 06.09.2012. A Memorandum of Understanding was signed on 28.10.2012 outlining the terms. The Corporate Debtor requested a partial payment of Rs. 27 lakhs as a deposit, followed by a request for a further deposit of Rs. 1 crore. The Operational Creditor opened a Letter of Credit for Rs. 22.35 crores. The Corporate Debtor failed to dispatch the corn, citing heavy congestion. The Corporate Debtor unilaterally demanded an additional 7% deposit. The Operational Creditor paid an additional Rs. 1.63

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## Issues and analysis

### Issue 1: Whether the nature of the debt is an 'Operational Debt' as defined under Section 5(21) of the …

**Ratio:** Section 5(21) of the Insolvency and Bankruptcy Code, 2016 defines 'Operational Debt' as a

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**Reasoning:** The court considered the facts presented and determined that the debt arose from the

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**Interpretation:** The interpretation of 'Operational Debt' includes any claim related to the

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**Application:** In this case, the debt arose from the agreement to supply yellow corn, making

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## Parties

- **Judges:** M.K. Sh…; Bhaskara Pantula…
- **Appellants:** Saba Bahar…
- **Respondents:** M/s. Royal Agro…

## Timeline

- **2012-09-06 — Performa I…**: Corporate Debtor issued a Performa Invoice agreeing to export and supply 12,500 Mts of…
- **2012-10-28 — Memorandum of…**: Memorandum of Understanding was signed by both parties recording the terms on which the…

## 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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