# In the matter of JBS Clothing Company Limited

> NCLT judgment dated 2024-11-29. Citation: TCN-2024-NCLT-00123. M/s. Binod Textiles, the Operational Creditor (OC), filed a Company Petition (CP (IB) No.…

- **Court:** NCLT
- **Order date:** 29 Nov 2024
- **Citation:** TCN-2024-NCLT-00123
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/jbs-clothing-company-limited-67393a5e

## Summary

### Background

M/s. Binod Textiles, the Operational Creditor (OC), filed a Company Petition (CP (IB) No. 755/MB/2020) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. JBS Clothing Company Limited, the Corporate Debtor (CD). The alleged default amount was Rs. 5,74,110/-, comprising a principal amount of Rs. 5,00,000/- and Rs. 74,110/- as interest, based on a refundable security deposit given by the OC to the CD at the time of executing a Distributor Agreement. The OC terminated the agreement due to sluggish market conditions and sought repayment of the security deposit with interest, which the CD failed to repay.

## Facts

M/s. Binod Textiles (Operational Creditor) filed CP (IB) No. 755/MB/2020 against M/s. JBS Clothing Company Limited (Corporate Debtor) under Section 9 of the IBC. The OC and CD entered into a Distributor Agreement on 29.05.2018, where the OC was appointed as a distributor for the CD's products in Jharkhand. As part of the agreement, the OC paid a refundable security deposit of Rs. 5,00,000/- to the CD, with an annual interest rate of 10%. The OC terminated the agreement via email on 07.01.2019, citing sluggish market conditions and personal reasons. The OC sought immediate repayment of the security deposit with interest. The CD failed to repay the deposit. The OC issued legal notices on 16.06.2019, 13.07.2019, and 13.09.2019. The CD replied, seeking time for repayment

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## Issues and analysis

### Issue 1: Whether the Operational Creditor (OC) is eligible to file the application under Section 9 of the …

**Ratio:** A sole proprietorship firm and its

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**Reasoning:** The application was filed by M/s. Binod Textiles, a sole proprietorship represented by

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**Interpretation:** This interpretation clarifies that a sole proprietorship can initiate

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**Application:** Since Mr. Binod Kumar Jain, the proprietor, signed the application and demand

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## Parties

- **Judges:** K. R. SAJI…; SANJIV…
- **Appellants:** M/S BINOD T…
- **Respondents:** M/S JBS CLOTHING…

## Timeline

- **2018-05-29 — Distributor Agreement…**: M/s. Binod Textiles (OC) and M/s. JBS Clothing Company Limited (CD) executed a…
- **2019-01-07 — Agreement Ter…**: The Operational Creditor (OC) terminated the Distributor Agreement via email, citing…

## 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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