# In the matter of Mohana Cotton Ginning Private Limited

> NCLT judgment dated 2023-09-01. Citation: TCN-2023-NCLT-01798. Posco Daewoo Corporation, the Operational Creditor (OC), filed a petition against Mohana Cotton…

- **Court:** NCLT
- **Order date:** 1 Sept 2023
- **Citation:** TCN-2023-NCLT-01798
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/mohana-cotton-ginning-private-limited-10753454

## Summary

### Background

Posco Daewoo Corporation, the Operational Creditor (OC), filed a petition against Mohana Cotton Ginning Private Limited, the Corporate Debtor (CD), to initiate Corporate Insolvency Resolution Process (CIRP) for a default of USD 1,757.48. The OC and CD had three international shipment contracts. Discrepancies in cotton weight, LC amendment costs, and lawyer's fees led to the CD agreeing to pay USD 1,757.48, for which the OC raised debit notes. The CD initially acknowledged the liability but later denied paying USD 1,080.60 while admitting liability for USD 176.88 and USD 500. The OC issued demand notices, and the CD replied, denying full liability and citing issues in business transactions and legal proceedings. The CD argued the petition was not maintainable due to an

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## Facts

Posco Daewoo Corporation (OC) filed a petition against Mohana Cotton Ginning Private Limited (CD) to initiate CIRP for a default of USD 1,757.48. The OC and CD had three international shipment contracts for Indian Raw Cotton. Discrepancies in cotton weight, LC amendment costs, and lawyer's fees led to the CD agreeing to pay USD 1,757.48, for which the OC raised debit notes. The CD acknowledged liability by executing debit notes transmitted via emails. The CD later informed the OC that it had remitted USD 2,630 against two debit notes, but the OC never received the amount. The OC issued three demand notices. The CD denied liability for USD 1,080.60 but admitted liability for USD 176.88 and USD 500. The CD filed a counter, arguing the petition was not maintainable due to

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## Issues and analysis

### Issue 1: Whether the amounts under the debit notes constituted an Operational Debt under Section 5(21) of …

**Ratio:** Operational debt means a claim in respect of the provision of goods or services including

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**Reasoning:** The court reasoned that the claimed amounts were not directly towards the supply of goods

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**Interpretation:** The definition of 'operational debt' under Section 5(21) of IBC is interpreted

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**Application:** The court applied this interpretation to the facts and determined that the

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## Parties

- **Judges:** TELAPROLU…
- **Appellants:** Posco Daewoo…
- **Respondents:** Mohana Cotton…
- **Advocates:** Eakansh…; Senu N…; +4 more

## Timeline

- **2016-11-10 — First International…**: OC and CD executed a contract for the supply of 200 MT of Indian Raw Cotton, Shankar 6…
- **2016-12-16 — Second International…**: OC and CD executed a contract for the supply of 300 MT of Indian Raw Cotton, Grade SLM…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 3(14) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-3)

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