# In the matter of Unitex Apparels Private Limited C.P. (IB)No.214-BB-2019

> NCLT judgment dated 2019-10-29. Citation: TCN-2019-NCLT-00790. Madura Coats Private Limited, an operational creditor, filed a petition under Section 9 of the…

- **Court:** NCLT
- **Order date:** 29 Oct 2019
- **Citation:** TCN-2019-NCLT-00790
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/unitex-apparels-private-limited-cp-ibno214-bb-2019-f2b1f6d0

## Summary

### Background

Madura Coats Private Limited, an operational creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, against Unitex Apparels Private Limited, the corporate debtor, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The petition was based on the corporate debtor's alleged default of Rs. 1,04,34,644/-, which included the principal amount and interest, for goods supplied by the operational creditor. The corporate debtor admitted to the debt but claimed inability to pay due to financial difficulties. The NCLT considered the pleadings of both parties and the provisions of the IBC.

## Facts

Madura Coats Private Limited (Operational Creditor) filed a petition against Unitex Apparels Private Limited (Corporate Debtor) under Section 9 of the IBC, 2016, for a default amount of Rs. 1,04,34,644/-. Madura Coats supplied cotton, synthetic, and core spun threads/yarns to Unitex Apparels, a company manufacturing readymade garments. Goods were supplied between 25.06.2016 and 21.08.2018 under invoices with a 90-day credit period. Unitex Apparels failed to make payments, resulting in the default. Unitex Apparels admitted the debt but claimed inability to pay due to financial difficulties since 2018, including losses in export business (Rs. 40.44 Crores) and pending recovery proceedings by SVC Co-op Bank Ltd. for Rs. 41,59,87,237/-. Unitex Apparels also stated that its

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## Issues and analysis

### Issue 1: Whether the petition filed by the Operational Creditor under Section 9 of the IBC, 2016, is …

**Ratio:** Section 9 of the IBC, 2016, allows an operational creditor to initiate CIRP against a

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**Reasoning:** The NCLT considered the pleadings and submissions of both parties and found that the

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**Interpretation:** Section 9 provides a mechanism for operational creditors to recover their dues

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**Application:** The NCLT applied Section 9 to the facts of the case, finding that the

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Appellants:** Madura Coats…
- **Respondents:** Unitex Apparels…

## Timeline

- **2016-06-25 — Goods Supply S…**: Operational Creditor started…
- **2018-08-21 — Goods Supply…**: Operational Creditor ended…

## 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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