# In the matter of TATA Chemicals Limited Vs Raj Process Equipment and Systems Private Limited CP 21-I&BP-NCLT-MAH-2018

> NCLT judgment dated 2018-11-30. Citation: TCN-2018-NCLT-00254. Tata Chemicals Limited filed a petition under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 30 Nov 2018
- **Citation:** TCN-2018-NCLT-00254
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/tata-chemicals-limited-vs-raj-process-equipment-and-systems-private-limited-cp-2-d2bc3a20

## Summary

### Background

Tata Chemicals Limited filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Raj Process Equipments and Systems Private Limited, the Corporate Debtor. The claim arose from a purchase order for designing, building, transporting, erecting, and commissioning a Double Effect Evaporator. Tata Chemicals, the Operational Creditor, made an advance payment of ₹4,40,000, representing 10% of the total purchase amount. The Corporate Debtor failed to deliver the evaporator by the agreed-upon date, leading to termination of the purchase order and a demand for the return of the advance payment along with financial losses.

## Facts

Tata Chemicals Limited (Operational Creditor) contracted with Raj Process Equipments and Systems Private Limited (Corporate Debtor) for the design, construction, and commissioning of a Double Effect Evaporator. The Operational Creditor paid an advance of ₹4,40,000, which was 10% of the total purchase price of ₹44,00,000. The agreed delivery date was September 30, 2016. The Corporate Debtor failed to deliver the evaporator by the deadline, despite repeated reminders. The Operational Creditor terminated the purchase order via legal notice on April 21, 2017, and demanded the return of the advance payment and compensation for financial losses amounting to ₹9,15,00,000. The Operational Creditor also claimed interest at 18% per annum on both the advance payment and the

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## Issues and analysis

### Issue 1: Whether the claim of the Operational Creditor constitutes an 'Operational Debt' as defined under …

**Ratio:** An 'Operational Debt' is defined under Section 5(21) of the IBC as a claim in respect of

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**Reasoning:** The NCLT reasoned that the claim was primarily for refund of advance money and

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**Interpretation:** The interpretation of 'Operational Debt' under Section 5(21) requires a direct

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**Application:** In this case, the NCLT found that the claim was not for goods or services

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## Parties

- **Judges:** V. P. S…; Ravikumar…; +1 more
- **Appellants:** TATA Chemicals…
- **Respondents:** Raj Process…
- **Advocates:** Rohan R. So…; Karl Ta…; +2 more

## Timeline

- **2016-06-22 — Letter of…**: Letter of Intent dated 22.6.2016…
- **2016-07-02 — Purchase…**: Purchase Order dated 2.7.2016 was raised on the Corporate Debtor by the Operational…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(21) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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