# In the matter of Akshar Fabrics Private Limited

> NCLT judgment dated 2023-09-11. Citation: TCN-2023-NCLT-01718. The case involves an application filed by Shree Hari Coal Corporation, an operational creditor,…

- **Court:** NCLT
- **Order date:** 11 Sept 2023
- **Citation:** TCN-2023-NCLT-01718
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/akshar-fabrics-private-limited-f5d39271

## Summary

### Background

The case involves an application filed by Shree Hari Coal Corporation, an operational creditor, under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Akshar Fabrics Private Limited, the corporate debtor, for defaulting on a payment of Rs. 4,34,16,554/-. The operational creditor supplied steam coal to the corporate debtor between 06.05.2022 and 04.09.2022, for which invoices were raised. The corporate debtor made some payments but failed to adhere to the agreed payment terms. The operational creditor issued a demand notice on 17.10.2022, which was delivered on 25.10.2022. The corporate debtor made further payments after the demand notice, but the operational creditor found them unacceptable and

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## Facts

Shree Hari Coal Corporation (Operational Creditor) supplied steam coal to Akshar Fabrics Private Limited (Corporate Debtor) between 06.05.2022 and 04.09.2022, raising invoices for the same. The invoices stipulated that interest at 24% would be charged on unpaid amounts after 7 days from supply. The Corporate Debtor made payments on a running account basis, adjusting towards principal and delayed payment interest. The last payment made by the Corporate Debtor was on 04.10.2022. The Operational Creditor served a demand notice dated 17.10.2022, delivered on 25.10.2022, under Section 8 of the IBC. After the demand notice, the Corporate Debtor made some payments on 10.11.2022 and offered further payments over 5 years, which the Operational Creditor rejected. The Operational

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted in the …

**Ratio:** The principle is that if a corporate debtor fails to pay an operational debt that is due,

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**Reasoning:** The Adjudicating Authority noted that the Operational Creditor supplied steam coal to the

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**Interpretation:** The interpretation of 'default' under the IBC requires a clear failure to pay a

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**Application:** In this case, the Corporate Debtor's failure to pay the full amount due for the

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## Parties

- **Judges:** SHAMMI…; KAUSHALENDRA…
- **Appellants:** Shree Hari Coal…
- **Respondents:** Akshar Fabrics…; Akshar Fabrics…

## Timeline

- **1991-07-29 — Incorporation of…**: Akshar Fabrics Private Limited was…
- **2022-05-06 — Supply of Ste…**: Operational Creditor supplied steam coal to Corporate Debtor from 06.05.2022 to…

## 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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