# In the matter of Sri Lakshmi Srinivasa Jute Mills Private Limited TCP (IB) No. 90-9-AMR-TP-2019 {CP (IB) No. 232-9-HDB-2019}

> NCLT judgment dated 2019-11-19. Citation: TCN-2019-NCLT-00558. The case involves a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016…

- **Court:** NCLT
- **Order date:** 19 Nov 2019
- **Citation:** TCN-2019-NCLT-00558
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/sri-lakshmi-srinivasa-jute-mills-private-limited-tcp-ib-no-90-9-amr-tp-2019-cp-i-d39b04a0

## Summary

### Background

The case involves a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Khetulal Pugalia And Sons (HUF) against Sri Lakshmi Srinivasa Jute Mills Pvt Ltd, seeking initiation of Corporate Insolvency Resolution Process (CIRP) due to default in payment of an operational debt. The petitioner, engaged in the business of sale and distribution of jute, supplied raw jute to the respondent, a Jute Mill. The respondent failed to honor the payments, leading to the filing of CP No. 172/2016 before the High Court for the States of Telangana and Andhra Pradesh at Hyderabad for winding up of the company. During the pendency of the proceedings, the parties entered into a settlement under a Memorandum of Understanding (MoU) dated 31.08.2018, where the

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## Facts

Khetulal Pugalia And Sons (HUF), based in Kolkata and engaged in the business of sale and distribution of jute, supplied raw jute worth Rs. 1,91,61,177/- to Sri Lakshmi Srinivasa Jute Mills Pvt Ltd, a Jute Mill incorporated in 1994. The Jute Mill was initially a Private Limited Company, converted to a Public Limited Company on 2001-02-28, and then reconverted to a Private Limited Company on 2016-05-20. The Respondent failed to make payments for the supplied jute. The Petitioner filed CP No. 172/2016 before the High Court for the States of Telangana and Andhra Pradesh at Hyderabad for winding up of the Company, claiming default of Rs. 2,45,80,177.03/-, which included interest at 18% per annum. During the pendency of the winding up proceedings, the parties entered into a

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## Issues and analysis

### Issue 1: Whether the Respondent defaulted in payment of an operational debt as defined under the Insolvency …

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

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**Reasoning:** The court reasoned that the Respondent received jute worth Rs. 1,91,61,177/- from the

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

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**Application:** In this case, the debt arose from the supply of raw jute by the Petitioner to

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## Parties

- **Judges:** Janab Mohammed…
- **Appellants:** Khetulal P…
- **Respondents:** Lakshmi Srinivasa…

## Timeline

- **1994-01-01 — Incorporation of…**: Sri Lakshmi Srinivasa Jute Mills Pvt Ltd…
- **2001-02-28 — Conversion to Public…**: Sri Lakshmi Srinivasa Jute Mills Pvt Ltd…

## 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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