# In the matter of Shree Ambika Sugars Limited IBA-284-2019

> NCLT judgment dated 2019-08-01. Citation: TCN-2019-NCLT-02144. The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 1 Aug 2019
- **Citation:** TCN-2019-NCLT-02144
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/shree-ambika-sugars-limited-iba-284-2019-58e6569c

## Summary

### Background

The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Christy Friedgram Industry (Operational Creditor) against Shree Ambika Sugars Limited (Corporate Debtor) for initiation of the Corporate Insolvency Resolution Process (CIRP). The Operational Creditor claimed that the Corporate Debtor failed to supply sugar after receiving an advance payment of ₹3,00,00,000. The Operational Creditor issued a purchase order to the Corporate Debtor on 10.11.2017 for the supply of 2000 MT of sugar. The Corporate Debtor acknowledged the receipt of the advance amount on 13.11.2017. Despite the advance payment, the Corporate Debtor failed to supply the sugar. The Corporate Debtor issued six post-dated cheques, each for ₹50,00,000, to

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## Facts

On 10.11.2017, Christy Friedgram Industry (Operational Creditor) issued a purchase order to Shree Ambika Sugars Limited (Corporate Debtor) for the supply of 2000 MT of Sugar (S30 Grade) at ₹36,500 per MT, excluding GST. On the same day, the Operational Creditor made an advance payment of ₹3,00,00,000 to the Corporate Debtor via RTGS. On 13.11.2017, the Corporate Debtor acknowledged receipt of the advance. The Corporate Debtor failed to supply the sugar. On 06.12.2017, the Operational Creditor sent an email stating that they had already paid ₹3,00,00,000 to lift the material. On 24.05.2018, the Corporate Debtor issued six post-dated cheques, each for ₹50,00,000, totaling ₹3,00,00,000, to refund the advance. The cheques were dishonored due to 'INSUFFICIENT FUNDS'. The

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## Issues and analysis

### Issue 1: Whether the advance payment made by the Operational Creditor towards the supply of sugar …

**Ratio:** An 'operational debt' is defined as a claim in respect of the provision of goods or

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**Reasoning:** The court reasoned that since the payment was made in advance for the supply of sugar, it

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**Interpretation:** The term 'operational debt' is interpreted broadly to include any debt related

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**Application:** In this case, the advance payment made by the Operational Creditor to the

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## Parties

- **Judges:** B.S.V. Prakash…; S. VIJAYARA…
- **Appellants:** M/s. Christy…
- **Respondents:** M/s. Shree Ambika…
- **Advocates:** T.V Muthu A…

## Timeline

- **2017-10-11 — Purchase Orde…**: Christy Friedgram Industry issued a purchase order to Shree Ambika Sugars Limited for the…
- **2017-10-11 — Advance Payme…**: Christy Friedgram Industry made an advance payment of ₹3,00,00,000 to Shree Ambika Sugars…

## 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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