# In the matter of Sir John Bakeries India Pvt. Ltd. (IB) 1677(ND)-2019

> NCLT judgment dated 2020-07-22. Citation: TCN-2020-NCLT-00985. M/S Brand Realty Services LTD., the operational creditor, filed an application under Section 9…

- **Court:** NCLT
- **Order date:** 22 Jul 2020
- **Citation:** TCN-2020-NCLT-00985
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sir-john-bakeries-india-pvt-ltd-ib-1677nd-2019-c0544419

## Summary

### Background

M/S Brand Realty Services LTD., the operational creditor, filed an application under Section 9 of the Insolvency & Bankruptcy Code, 2016, against M/S Sir John Bakeries India Pvt. Ltd., the corporate debtor, seeking initiation of the corporate insolvency resolution process. The operational creditor claimed that the corporate debtor defaulted on payments related to consultancy and investment services provided for setting up a new retail outlet. An agreement was entered into on 28.11.2014, which was later ratified by an Account Settlement Agreement dated 15.06.2018. The corporate debtor allegedly failed to make payments as per the settlement agreement, leading to the application for CIRP.

## Facts

M/S Brand Realty Services LTD. (Operational Creditor) provided consultancy and investment services to M/S Sir John Bakeries India Pvt. Ltd. (Corporate Debtor) for setting up a retail outlet. An agreement was entered on 2014-11-28, followed by an Account Settlement Agreement on 2018-06-15. The Corporate Debtor agreed to pay Rs. 33,94,000/- as commission. The Corporate Debtor issued post-dated cheques, but requested the Operational Creditor not to present them, promising RTGS transfers instead, which never materialized. Cheques issued were dishonored due to 'Stop Payment'. The Operational Creditor served a legal notice on 2019-04-30, followed by a demand notice under the IBC. The Corporate Debtor replied on 2019-05-25, denying liability and claiming a pre-existing

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## Issues and analysis

### Issue 1: Whether the claim based on the settlement agreement falls under the definition of 'operational …

**Ratio:** The NCLT relied on the principle that an 'operational debt' means a claim in respect of

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**Reasoning:** The NCLT reasoned that the claim was based on the settlement agreement dated 15.06.2018,

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**Interpretation:** The interpretation of 'operational debt' under Section 5(21) of the IBC is

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**Application:** In this case, the claim arose from a settlement agreement, not directly from

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## Parties

- **Judges:** ABNI RANJAN KUMAR…; K.K. V…
- **Appellants:** M/S BRAND REALTY…
- **Respondents:** M/S SIR JOHN…; Nishant…

## Timeline

- **2014-11-28 — Agreement…**: Operational Creditor and Corporate…
- **2018-06-15 — Account Settlement…**: Agreement ratified vide an…

## 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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