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

> NCLT judgment dated 2021-03-09. Citation: TCN-2021-NCLT-02759. 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-02759
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/vedik-cotton-limited-cp-ib-2484-mb-2018-1b8bfd00

## 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 Operational Creditor claimed an operational debt of Rs. 70,76,944 as of March 31, 2016, along with interest. The Corporate Debtor allegedly failed to make payments despite agreements and a demand notice.

## Facts

Span Fibre India Private Limited (Operational Creditor) filed a petition under Section 9 of the Insolvency & Bankruptcy Code, 2016, against Vedik Cotton Limited (Corporate Debtor) to initiate CIRP. The Operational Creditor claimed an operational debt of Rs. 70,76,944 as of March 31, 2016, with additional interest of Rs. 5,08,424. A Memorandum of Understanding dated June 1, 2005, indicated that the Operational Creditor made payments on behalf of the Corporate Debtor to Reliance Industries Ltd. for the purchase of 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 ledger account, confirming the debt. A demand notice was sent on April 30, 2018,

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## Issues and analysis

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

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

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**Reasoning:** The Adjudicating Authority noted that the Corporate Debtor failed to respond to the

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

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**Application:** The Adjudicating Authority found that the Operational Creditor had met the

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## Parties

- **Judges:** Harihar Prakash…; RavikumarDu…
- **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 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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