# In the matter of Sehgal Packaging Pvt. Ltd. (IB) 2041-ND-2019

> NCLT judgment dated 2020-01-07. Citation: TCN-2020-NCLT-02479. The case involves an application by Mr. Vishal Jain, operating as Jitendra & Co., an…

- **Court:** NCLT
- **Order date:** 7 Jan 2020
- **Citation:** TCN-2020-NCLT-02479
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sehgal-packaging-pvt-ltd-ib-2041-nd-2019-05d89c4a

## Summary

### Background

The case involves an application by Mr. Vishal Jain, operating as Jitendra & Co., an Operational Creditor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Sehgal Packaging Pvt. Ltd., the Corporate Debtor, due to its inability to liquidate outstanding dues. The Operational Creditor had been dealing with the Corporate Debtor for several years, supplying paper and paper board. After the financial year 2018, an outstanding due of Rs. 1,22,00,000/- remained. An earlier petition under section 9 of the Insolvency and Bankruptcy Code, 2016 (IB No. 381/ND/2018), had culminated in a settlement where eight postdated cheques were issued.

## Facts

Mr. Vishal Jain, operating as Jitendra & Co., is an Operational Creditor who supplied paper and paper board to Sehgal Packaging Pvt. Ltd., the Corporate Debtor. After the financial year 2018, an outstanding due of Rs. 1,22,00,000/- remained unpaid. An earlier CIRP petition (IB No. 381/ND/2018) was settled with the issuance of eight postdated cheques. Five cheques were honored, but two were dishonored. The Corporate Debtor remitted the amounts under the dishonored instruments. The last postdated cheque, no. 023748 dated 2018-10-31, for Rs. 14,19,500/-, drawn on Allahabad Bank, was also dishonored due to 'Exceeds Arrangement' and remains unpaid. The Operational Creditor sent reminders and a demand notice under section 8 of the IBC, but received no response. The

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted in …

**Ratio:** A default occurs when a debt has become due and payable and is not paid by the debtor.

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**Reasoning:** The court reasoned that the settlement agreement and the issuance of cheques, especially

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**Interpretation:** The legal issue revolves around the interpretation of 'default' under the

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**Application:** In this case, the Corporate Debtor's issuance of cheques as part of a

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## Parties

- **Judges:** Ina Mal…; SH. L. N.…
- **Appellants:** Vishal…
- **Respondents:** SEHGAL PACKAGING…
- **Advocates:** Arihant…; Sidharth…

## Timeline

- **2018-01-01 — Outstandi…**: An outstanding due of Rs. 1,22,00,000/-…
- **2018-10-31 — Dishonor of…**: Cheque no. 023748 for Rs.…

## 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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