# In the matter of VIjayeswari Cotton Mills Pvt. Ltd. C.P. (IB) No. 151-BB-2020

> NCLT judgment dated 2020-08-13. Citation: TCN-2020-NCLT-00852. C.P.(IB)No.151/BB/2020 was filed by C.A. Galiakotwala & Co. Pvt. Ltd. (Operational Creditor)…

- **Court:** NCLT
- **Order date:** 13 Aug 2020
- **Citation:** TCN-2020-NCLT-00852
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/vijayeswari-cotton-mills-pvt-ltd-cp-ib-no-151-bb-2020-cf1e8e17

## Summary

### Background

C.P.(IB)No.151/BB/2020 was filed by C.A. Galiakotwala & Co. Pvt. Ltd. (Operational Creditor) under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 6 of the I&B (Application to Adjudicating Authority) Rules, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Vijayeswari Cotton Mills Pvt. Ltd (Respondent/Corporate Debtor). The claim arose from the Corporate Debtor's failure to deliver contracted cotton, leading to an arbitration award in favor of the Operational Creditor.

## Facts

C.A. Galiakotwala & Co. Pvt. Ltd. (Operational Creditor) filed C.P.(IB)No.151/BB/2020 under Section 9 of the IBC, seeking to initiate CIRP against Vijayeswari Cotton Mills Pvt. Ltd (Corporate Debtor). The Operational Creditor and Corporate Debtor entered into contracts for the purchase of cotton bales. The Corporate Debtor failed to deliver the contracted cotton, leading to an arbitration award on 16.09.2012 in favor of the Operational Creditor for Rs.31,40,702/- plus interest. The Corporate Debtor was served with a copy of the Arbitration Award on 22.11.2012 and did not challenge it. The Operational Creditor sent a demand notice on 04.09.2019 for the unpaid amount of Rs.71,06,498/-. The Operational Creditor filed the instant petition on 20.02.2020. The Corporate

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## Issues and analysis

### Issue 1: Whether the Petition is maintainable under the …

**Ratio:** The provisions of the IBC are not intended to be used as a recovery mechanism for amounts

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**Reasoning:** The NCLT reasoned that the petition was essentially an attempt to recover an amount

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**Interpretation:** The IBC is interpreted as a mechanism to address insolvency and rehabilitate

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**Application:** The NCLT applied the principle that the IBC cannot be used as a recovery

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Appellants:** C.A. Galiakotwala…
- **Respondents:** Vijayeswari…; Vijayeshwari…

## Timeline

- **2010-07-28 — Contracts E…**: Operational Creditor and Corporate Debtor entered into contracts for the purchase of…
- **2012-09-16 — Arbitration…**: Arbitration Award passed in favor of the Operational Creditor for Rs.31,40,702/- plus…

## 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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