# In the matter of Bhumi Cottex Industry Pvt. Ltd.

> NCLT judgment dated 2024-03-07. Citation: TCN-2024-NCLT-02174. Ujjawal Refinery Private Limited, an operational creditor, filed a company petition under…

- **Court:** NCLT
- **Order date:** 7 Mar 2024
- **Citation:** TCN-2024-NCLT-02174
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bhumi-cottex-industry-pvt-ltd-a5443981

## Summary

### Background

Ujjawal Refinery Private Limited, an operational creditor, filed a company petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Bhumi Cottex Industry Pvt Ltd, the corporate debtor, for a resolution of operational debt amounting to Rs. 3,29,37,538/-. The operational creditor and corporate debtor had commercial transactions since 2019, with the operational creditor advancing Rs. 5,48,12,538/- for raw materials. The corporate debtor failed to supply the raw material due to Covid-19 and promised a refund. An amount of Rs. 2,18,75,000/- was refunded between 05.05.2020 and 30.09.2020, with a request for more time to refund the balance. The operational creditor granted time until

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## Facts

Ujjawal Refinery Private Limited (Operational Creditor) and Bhumi Cottex Industry Pvt Ltd (Corporate Debtor) had commercial transactions since 2019. The Operational Creditor advanced Rs. 5,48,12,538/- to the Corporate Debtor for the purchase of raw materials. Due to Covid-19, the Corporate Debtor failed to supply the raw materials in April 2020 and promised to refund the advance. The Corporate Debtor refunded Rs. 2,18,75,000/- between May and September 2020 and sought additional time to refund the remaining amount, which was granted until July 2021. The Corporate Debtor failed to make further payments, leading the Operational Creditor to issue a demand notice under Section 8 of the IBC on 15.09.2021. The Corporate Debtor claimed a pre-existing dispute, alleging that

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## Issues and analysis

### Issue 1: Whether the default occurred within the period specified under Section 10A of the Insolvency and …

**Ratio:** Section 10A of the IBC bars the initiation of CIRP for defaults occurring on or after

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**Reasoning:** The NCLT observed that the Operational Creditor's own records, including the demand

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**Interpretation:** Section 10A is interpreted strictly to bar CIRP initiation for defaults

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**Application:** In this case, the NCLT found that the default date, as per the Operational

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## Parties

- **Judges:** H.V. Subb…; Madhu S…
- **Appellants:** Ujjawal Refinery…
- **Respondents:** Bhumi Cottex…

## Timeline

- **2019-01-01 — Commercial Transactions…**: Commercial transactions commenced between Ujjawal Refinery Private Limited and Bhumi…
- **2020-03-01 — Advance P…**: Ujjawal Refinery Private Limited advanced Rs. 5,48,12,538/- to Bhumi Cottex Industry Pvt…

## 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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