# In the matter of SEL Manufacturing Company Limited CP (IB) No. 161-Chd-Pb-2019

> NCLT judgment dated 2019-05-03. Citation: TCN-2019-NCLT-03505. The case originates from a petition under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 3 May 2019
- **Citation:** TCN-2019-NCLT-03505
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sel-manufacturing-company-limited-cp-ib-no-161-chd-pb-2019-c7eaec2d

## Summary

### Background

The case originates from a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by M/s Yamuna Fertilizer, an operational creditor, against M/s SEL Manufacturing Company Limited, the corporate debtor. A prior petition under Section 7 of the IBC, 2016, had already been admitted against the corporate debtor at the instance of State Bank of India. The petitioner's counsel referred to an order dated 23.01.2019 from the NCLAT, New Delhi, in Company Appeal (AT) (Insolvency) No.76 of 2019, titled "Rokadoba Maharaj Ginning & Pressing Pvt.Ltd. Vs. Sel Manufacturing Company Limited”. Reference was also made to an order dated 22.06.2018 of the Punjab and Haryana High Court in CWP-15685-2018, titled “Dhiraj Saluja Vs. Union of India And Ors".

## Facts

M/s Yamuna Fertilizer, an operational creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against M/s SEL Manufacturing Company Limited, the corporate debtor. Previously, a petition under Section 7 of the IBC, 2016, had been admitted against the same corporate debtor at the instance of State Bank of India. The petitioner's counsel cited an order dated 23.01.2019 from the NCLAT and an order dated 22.06.2018 from the Punjab and Haryana High Court. The petitioner's counsel argued that there was no bar on the corporate debtor making payments towards salaries, vendors, and suppliers. The Hon'ble High Court had directed that all future revenues of the respondent company be routed through a Trust and Retention Account. The court directed

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## Issues and analysis

### Issue 1: Whether the corporate debtor is permitted to make payments towards salaries of employees, vendors, …

**Ratio:** The principle is that essential operational payments, such as salaries and payments to

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**Reasoning:** The court considered the petitioner's submission that there is no bar on payment by the

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**Interpretation:** This issue involves the interpretation of the Insolvency and Bankruptcy Code,

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**Application:** The court applied this principle by directing that salaries of employees and

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## Parties

- **Judges:** M.K. Sh…; Pradeep R.…
- **Appellants:** M/s Yamuna…
- **Respondents:** M/s SEL Manufactur…

## Timeline

- **2019-01-23 — NCLAT Or…**: Reference to an order dated 23.01.2019 of the Hon'ble National Company Law Appellate…
- **2018-06-22 — High Court…**: Reference to an order dated 22.06.2018 of the Hon'ble Punjab and Haryana High Court in…

## 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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