# In the matter of City Oil Private Limited

> NCLT judgment dated 2024-01-12. Citation: TCN-2024-NCLT-03093. Apar Industries Limited, the Operational Creditor/Applicant, filed an application under Section…

- **Court:** NCLT
- **Order date:** 12 Jan 2024
- **Citation:** TCN-2024-NCLT-03093
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/city-oil-private-limited-9f8d6384

## Summary

### Background

Apar Industries Limited, the Operational Creditor/Applicant, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against City Oil Private Limited, the Corporate Debtor/Respondent, due to unpaid operational debt. The Operational Creditor claimed a default of Rs. 1,54,92,104/-, including principal and interest, arising from the supply of "Power Oil" brand lubricant. The Corporate Debtor admitted to the business relationship but raised disputes regarding the quality of supplied products, GST payment, and the applicability of interest. The Adjudicating Authority considered the rival contentions and documents presented.

## Facts

Apar Industries Limited (Operational Creditor) filed a petition against City Oil Private Limited (Corporate Debtor) under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming a default of Rs. 1,54,92,104/-, which included a principal amount of Rs. 1,00,15,995/- and interest calculated at 24% per annum. The default was claimed to have occurred on 13.07.2019, based on payment terms requiring payment within 45 days of delivery. The Operational Creditor supplied "Power Oil" brand lubricant to the Corporate Debtor based on purchase orders issued between May and July 2019, totaling Rs. 1,11,75,564/-, out of which the Corporate Debtor paid Rs. 11,46,634/- with the last payment on 30.11.2021. The Corporate Debtor acknowledged the debt but cited financial

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## Issues and analysis

### Issue 1: Whether the interest rate mentioned in the invoices …

**Ratio:** Merely citing the interest rate in the invoices by itself does not render it legally

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**Reasoning:** The Adjudicating Authority relied on the decision in Rohit & Company v. Twenty First

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**Interpretation:** The legal principle is that an explicit agreement or a legally binding document

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**Application:** In this case, since there was no explicit agreement or legally binding document

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## Parties

- **Judges:** BIDISHA BA…; D. Ar…
- **Appellants:** Apar Industries…
- **Respondents:** City Oil Private…

## Timeline

- **2019-05-29 — First Invoi…**: The first invoice was issued…
- **2019-05-11 — First Purchas…**: Purchase Order Number COPL/AIL/02/19-20 was issued by the Corporate Debtor for the supply…

## 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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