# In the matter of Karan Development Services Pvt Ltd

> NCLT judgment dated 2024-11-13. Citation: TCN-2024-NCLT-00256. The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 13 Nov 2024
- **Citation:** TCN-2024-NCLT-00256
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/karan-development-services-pvt-ltd-cf6641a6

## Summary

### Background

The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by Sumit Traders, a proprietary concern of Amit Kabra HUF, against Karan Development Services Private Limited, the Corporate Debtor. The applicant claimed a default amount of Rs. 1,21,26,242/-, including principal and interest, for the supply of cement during the years 2010 to 2012. The respondent argued that the debt was barred by limitation and that the claim was based on an agreement to sell immovable property, not on the supply of goods. The applicant contended that the respondent had acknowledged the debt through various agreements and balance confirmation certificates.

## Facts

Sumit Traders, the applicant, supplied cement to Karan Development Services Private Limited, the respondent, between 2010 and 2012. Invoices totaling Rs. 38,94,308/- were raised. The respondent failed to pay the dues. An agreement dated 30.06.2014 was entered into, where the respondent agreed to sell land to adjust the outstanding dues. This sale did not materialize. Another agreement dated 07.12.2016 was made, where the respondent agreed to pay Rs. 1,75,00,000/- including interest. The applicant issued a demand notice on 05.09.2018. The respondent acknowledged the debt in a reply dated 26.09.2018. The applicant filed the application on 24.04.2019. The respondent issued post-dated cheques dated 29.03.2014 & 20.09.2014, which were dishonored. The respondent also

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## Issues and analysis

### Issue 1: Whether the debt claimed by the applicant constitutes an operational debt under the Insolvency and …

**Ratio:** An operational debt is a claim in respect of the provision of goods or services,

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**Reasoning:** The court reasoned that the debt arose from the supply of cement by the applicant to the

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**Interpretation:** The term 'operational debt' is interpreted broadly to include debts arising

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**Application:** The court applied this principle to the facts, noting that the cement supplied

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## Parties

- **Judges:** Chitra Ram…; KAUSHALENDRA…
- **Appellants:** Sumit Tr…
- **Respondents:** Karan Development…; Karan Development…

## Timeline

- **2010-01-01 — Supply of…**: Applicant supplied cement to the…
- **2014-06-30 — Agreement t…**: Applicant and respondent entered into an agreement where respondent agreed to sell land…

## 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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