# In the matter of The National Sewing Thread Company Limited IA(IBC)-1108(CHE)-2021 in IBA-622-2019

> NCLT judgment dated 2021-12-06. Citation: TCN-2021-NCLT-00252. N.R.G. Tex filed an application (IA(IBC)/1108(CHE)/2021) under Section 60(5) of the Insolvency…

- **Court:** NCLT
- **Order date:** 6 Dec 2021
- **Citation:** TCN-2021-NCLT-00252
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/the-national-sewing-thread-company-limited-iaibc-1108che-2021-in-iba-622-2019-dac2995c

## Summary

### Background

N.R.G. Tex filed an application (IA(IBC)/1108(CHE)/2021) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, challenging the rejection of its claim by the Resolution Professional (RP) of The National Sewing Thread Company Limited. N.R.G. Tex claimed to be a Del Credere Agent, facilitating the supply of cotton yarn to the Corporate Debtor from various mills. They sought to recover Rs. 30,15,612/- with 12% interest from 01.04.2019. The RP rejected the claim, leading to this application before the NCLT.

## Facts

N.R.G. Tex, represented by Mr. T. Saravana, claimed to be a Del Credere Agent for various mills, including Rajapalayam Mill Limited, Sri Vishnu Shankar Mill Limited, Sandhya Spinning Mill Limited, and Sundarasanam Spinning Mills. N.R.G. Tex facilitated the supply of cotton yarn to The National Sewing Thread Company Limited (Corporate Debtor). N.R.G. Tex claimed to have financed the Corporate Debtor by making payments to the suppliers on their behalf, totaling Rs. 26,92,510/-. The Corporate Debtor allegedly issued two cheques for Rs. 26,92,510/- and Rs. 2,90,792/- dated 26.09.2019, which were dishonored due to 'account blocked' and 'payment stopped by the drawer'. The Corporate Debtor also paid an interest amount of Rs. 2,79,291/- on 05.04.2018 to the Applicant. The

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## Issues and analysis

### Issue 1: Whether the Resolution Professional was right in rejecting the claim of the Applicant on the ground …

**Ratio:** The definition of 'financial debt' under Section 5(8) of the IBC, 2016, requires a debt

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**Reasoning:** The court reasoned that there was no explicit written agreement between the Corporate

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**Interpretation:** The court interpreted Section 5(8) of the IBC, 2016, to require a direct

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**Application:** In this case, the Applicant claimed to be a Del Credere Agent and made payments

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## Parties

- **Judges:** (Retd.) S.…; Anil Ku…
- **Appellants:** N.R.G.…
- **Respondents:** The National…

## Timeline

- **2019-08-29 — CIRP Init…**: Corporate Insolvency Resolution Process (CIRP)…
- **2019-09-26 — Cheque Is…**: Corporate Debtor issued two cheques for Rs. 26,92,510/- and Rs. 2,90,792/- which were…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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