# In the matter of Innovative Textiles Ltd.

> NCLT judgment dated 2024-01-24. Citation: TCN-2024-NCLT-02934. The case involves an application filed by M/s. Gagan Fibres Private Limited, the Operational…

- **Court:** NCLT
- **Order date:** 24 Jan 2024
- **Citation:** TCN-2024-NCLT-02934
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/innovative-textiles-ltd-14f98dec

## Summary

### Background

The case involves an application filed by M/s. Gagan Fibres Private Limited, the Operational Creditor, under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Innovative Textiles Limited, the Corporate Debtor. The Operational Creditor claims that the Corporate Debtor defaulted on a principal amount of Rs. 71,01,431.01 plus interest of Rs. 30,78,312, totaling Rs. 1,01,79,743.01. The Corporate Debtor denies the allegations, citing limitation and disputing the inclusion of interest in the operational debt.

## Facts

M/s. Gagan Fibres Private Limited (Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against M/s. Innovative Textiles Limited (Corporate Debtor). The Operational Creditor and Corporate Debtor had a business arrangement for supplying goods and materials since 2017, facilitated by a Letter of Credit (LC). The Operational Creditor claimed a default of Rs. 71,01,431.01 (principal) plus Rs. 30,78,312 (interest), totaling Rs. 1,01,79,743.01, with the date of default being 14.01.2019. The Corporate Debtor denied the allegations, arguing that the application was time-barred and that the interest amount could not be included to meet the minimum threshold of Rs. 1,00,00,000 as per Section 4 of the IBC. The

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## Issues and analysis

### Issue 1: Whether the present application is within the minimum default amount of Rs.1,00,00,000/- as …

**Ratio:** The Hon'ble NCLAT in Pavan Enterprises Vs. Gammon India Ltd. held that 'debt' includes

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**Reasoning:** The Adjudicating Authority found that the invoices did not provide for interest on

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**Interpretation:** The legal issue concerns the interpretation of 'debt' under the IBC and whether

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**Application:** In this case, since there was no agreement for interest, the principal amount

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## Parties

- **Judges:** BACHU VENKAT…; ATUL CHAT…
- **Appellants:** M/s. GAGAN FIBRES…
- **Respondents:** M/s. INNOVATIVE…

## Timeline

- **2017-01-01 — Business Arra…**: The Operational Creditor and Corporate Debtor entered into a business arrangement for…
- **2019-01-14 — Date of D…**: The date of default as per…

## 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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