# In the matter of S.P.M. (India) Limited C.P. (IB) No. 101-BB-2019

> NCLT judgment dated 2019-11-05. Citation: TCN-2019-NCLT-00715. M/s. SMC Corporation (India) Private Limited, the operational creditor, filed a petition under…

- **Court:** NCLT
- **Order date:** 5 Nov 2019
- **Citation:** TCN-2019-NCLT-00715
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/spm-india-limited-cp-ib-no-101-bb-2019-a7ddda43

## Summary

### Background

M/s. SMC Corporation (India) Private Limited, the operational creditor, filed a petition under Section 9 of the IBC, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. SPM (India) Limited, the corporate debtor, due to an outstanding operational debt. The operational creditor claimed that the corporate debtor defaulted on payments for goods supplied, leading to a total outstanding amount of Rs. 62,37,652, including principal and interest. The corporate debtor acknowledged the debt in a letter dated 24.01.2017 and made a partial payment of Rs. 2,00,000 on 27.07.2017. However, subsequent cheques issued by the corporate debtor were returned with the endorsement 'Refer to Drawer'. The operational creditor issued a demand notice on

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## Facts

M/s. SMC Corporation (India) Private Limited (Operational Creditor) filed C.P. (IB) No.101/BB/2019 under Section 9 of the IBC, 2016, against M/s. SPM (India) Limited (Corporate Debtor) for an outstanding operational debt of Rs. 62,37,652. The debt comprised Rs. 37,62,752 as principal and Rs. 24,74,900 as interest calculated at 24% p.a. up to 31.12.2018. The debt arose from the supply of engineering components by the Operational Creditor to the Corporate Debtor between August 2015 and February 2016, for which 48 invoices were issued. The Corporate Debtor acknowledged the debt in a letter dated 24.01.2017, stating that Rs. 19,89,540 was due since 29.09.2015 and would be cleared by mid-April 2017, with interest payable. A partial payment of Rs. 2,00,000 was made on

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## Issues and analysis

### Issue 1: Whether the debt claimed by the Operational Creditor constitutes an 'operational debt' as defined …

**Ratio:** Section 5(21) of the IBC, 2016, defines 'operational debt' as a claim in respect of the

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**Reasoning:** The Adjudicating Authority observed that the claims made by the Operational Creditor were

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**Interpretation:** The definition of 'operational debt' is interpreted to include claims arising

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**Application:** The Adjudicating Authority applied the definition of 'operational debt' to the

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Appellants:** M/s SMC Corporatio…
- **Respondents:** M/s.SPM (India)…

## Timeline

- **2015-08-01 — Purchase…**: Between August 2015 and February 2016, the Corporate Debtor placed 30 purchase orders on…
- **2016-02-01 — Purchase…**: Between August 2015 and February 2016, the Corporate Debtor placed 30 purchase orders on…

## 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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