# In the matter of Vedik Cotton Limited CP (IB) 2484 -MB-2018

> NCLT judgment dated 2021-03-09. Citation: TCN-2021-NCLT-02775. The case involves a Company Petition filed by Span Fibre India Private Limited (Operational…

- **Court:** NCLT
- **Order date:** 9 Mar 2021
- **Citation:** TCN-2021-NCLT-02775
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/vedik-cotton-limited-cp-ib-2484-mb-2018-0ea724df

## Summary

### Background

The case involves a Company Petition filed by Span Fibre India Private Limited (Operational Creditor) under Section 9 of the Insolvency & Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Vedik Cotton Limited (Corporate Debtor). The claim is for an operational debt of Rs. 70,76,944 as on 31.03.2016, along with interest. The Operational Creditor and Corporate Debtor had a Memorandum of Understanding dated 01.06.2005, where the Operational Creditor agreed to make payments on behalf of the Corporate Debtor to Reliance Industries Ltd. for the purchase of goods. An agreement dated 01.07.2009 designated the Operational Creditor as the Del Credere Agent of Reliance Industries Limited.

## Facts

Span Fibre India Private Limited (Operational Creditor) filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against Vedik Cotton Limited (Corporate Debtor) for an operational debt. The debt amounted to Rs. 70,76,944 as of March 31, 2016, with additional interest of Rs. 5,08,424 as of February 14 and 15, 2017, totaling Rs. 75,85,368. The Operational Creditor and Corporate Debtor had a Memorandum of Understanding (MOU) dated June 1, 2005, where the Operational Creditor agreed to make payments on behalf of the Corporate Debtor to Reliance Industries Ltd. for purchasing goods. An agreement dated July 1, 2009, designated the Operational Creditor as the Del Credere Agent of Reliance Industries Limited. The Corporate Debtor maintained a running

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## Issues and analysis

### Issue 1: Whether the petition filed by the Operational Creditor under Section 9 of the Insolvency and …

**Ratio:** Section 9 of the Insolvency and Bankruptcy Code, 2016, allows an operational creditor to

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**Reasoning:** The Adjudicating Authority observed that the Operational Creditor had provided sufficient

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**Interpretation:** Section 9 of the IBC provides a mechanism for operational creditors to recover

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**Application:** In this case, the Operational Creditor presented evidence of a debt owed by the

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## Parties

- **Judges:** Harihar Prakash…; Ravikumar…; +1 more
- **Appellants:** Span Fibre India…
- **Respondents:** Vedik Cotton…

## Timeline

- **2005-06-01 — Memorandum of…**: Operational Creditor agreed to make payments on behalf of Corporate Debtor to Reliance…
- **2009-07-01 — Agreemen…**: Operational Creditor was the Del Credere…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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