# In the matter of AGM Auto Private Limited CP (IB) No. 209-Chd-Hry-2020

> NCLT judgment dated 2022-10-28. Citation: TCN-2022-NCLT-00588. M/s Prompt Enterprises Private Limited, the operational creditor, filed a petition under…

- **Court:** NCLT
- **Order date:** 28 Oct 2022
- **Citation:** TCN-2022-NCLT-00588
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/agm-auto-private-limited-cp-ib-no-209-chd-hry-2020-1d0e1730

## Summary

### Background

M/s Prompt Enterprises Private Limited, the operational creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s AGM Auto Private Limited, the corporate debtor, due to unpaid operational debt. The operational creditor supplied goods to the corporate debtor, and a running account was maintained. The corporate debtor admitted to an outstanding amount but there were discrepancies in the accounts. The petitioner issued a demand notice, and the corporate debtor made partial payments but failed to clear the entire outstanding amount. The Adjudicating Authority considered whether the demand notice was properly served, whether the operational debt was disputed, and whether

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## Facts

M/s Prompt Enterprises Private Limited (Operational Creditor) supplied steel tubes to M/s AGM Auto Private Limited (Corporate Debtor). An amount of Rs. 1,58,61,398/- was outstanding as of 09.01.2020. The Corporate Debtor admitted to Rs. 200,60,910.18 as on 26.12.2019. There was a difference of Rs. 12,66,522.69 due to unauthorized debiting by the Corporate Debtor. The Corporate Debtor also debited Rs. 1,01,010/- on different dates. The Operational Creditor sent a demand notice on 01.02.2020. The Corporate Debtor transferred Rs. 10.00 lakhs on 05.02.2020, Rs. 10.00 lakhs on 19.02.2020, and Rs. 10.00 lakhs on 02.03.2020. The total unpaid operational debt was Rs. 1,67,27,124/-. The petition was filed on 06.10.2022, while the date of default was 30.01.2020. The Corporate

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## Issues and analysis

### Issue 1: Whether the demand notice in Form 3 …

**Ratio:** A demand notice is considered duly served if the petitioner provides evidence of delivery

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**Reasoning:** The petitioner placed a copy of the e-mail and registered post details on record, which

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**Interpretation:** The service of demand notice is a mandatory requirement under Section 8 of the

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**Application:** The court found that the demand notice was properly served because the

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## Parties

- **Judges:** Harnam Singh…; SUBRATA KUM…
- **Appellants:** M/s Prompt…
- **Respondents:** M/s AGM Auto…

## Timeline

- **2020-01-09 — Last Supply to…**: The last supply of goods was made…
- **2020-01-30 — Date of D…**: The date of default is…

## 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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