# In the matter of Spruce Trading Private Limited CP No. 312-IBC-NCLT-MB-MAH-2018

> NCLT judgment dated 2018-09-12. Citation: TCN-2018-NCLT-00773. The case pertains to an application filed under Section 9 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 12 Sept 2018
- **Citation:** TCN-2018-NCLT-00773
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/spruce-trading-private-limited-cp-no-312-ibc-nclt-mb-mah-2018-098e0db6

## Summary

### Background

The case pertains to an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by European Projects & Aviation Limited (Operational Creditor) against Spruce Trading Private Limited (Corporate Debtor) for initiation of Corporate Insolvency Resolution Process (CIRP). The Operational Creditor claimed that the Corporate Debtor defaulted on payments for sales invoices raised in 2011-12 and earlier financial years. Despite several correspondences, meetings, and a settlement agreement, the Corporate Debtor failed to clear the outstanding dues. The Operational Creditor issued a demand notice under Section 8 of the Code, but the Corporate Debtor neither paid the amount nor raised any dispute within the stipulated time.

## Facts

European Projects & Aviation Limited (Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, against Spruce Trading Private Limited (Corporate Debtor). The Operational Creditor had raised sales invoices amounting to ₹29.36 crore in 2011-12 and ₹7.67 crores pertaining to earlier financial years. The Corporate Debtor was unable to pay the said amount. Several correspondences and meetings were held between the parties. The Corporate Debtor executed a settlement agreement (Annexure B1) agreeing to transfer investments and pay the balance dues. The liability was reduced to ₹11.11 Crores. In the Financial Year 2016-17, the Corporate Debtor remitted ₹3 Lacs and entered into an assignment agreement (Annexure-C) for assets

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor committed a 'Default' as defined under Section 3(12) of the Insolvency …

**Ratio:** A 'Default' occurs when a debt has become due

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**Reasoning:** The court observed that the Corporate Debtor failed to pay the outstanding dues despite

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**Interpretation:** Section 3(12) defines 'default' as non-payment of debt when it has become due

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**Application:** The Corporate Debtor's failure to pay the outstanding dues, despite admitting

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## Parties

- **Judges:** M.K. Sh…
- **Appellants:** European Projects…
- **Respondents:** Spruce Trading…

## Timeline

- **2011-01-01 — Sales Invoice…**: The Operational Creditor raised sales invoices amounting to ₹29.36 crore on the Corporate…
- **2016-08-01 — Partial Payment and…**: The Corporate Debtor remitted an amount of ₹3 Lacs in the month of August, 2016 and…

## 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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