# In the matter of Motion Education Private Limited CP No. (IB)- 69-7-JPR-2021

> NCLT judgment dated 2023-04-20. Citation: TCN-2023-NCLT-03707. Prepladder Private Limited, the Financial Creditor/Applicant, filed an application under…

- **Court:** NCLT
- **Order date:** 20 Apr 2023
- **Citation:** TCN-2023-NCLT-03707
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/motion-education-private-limited-cp-no-ib-69-7-jpr-2021-6ece83c4

## Summary

### Background

Prepladder Private Limited, the Financial Creditor/Applicant, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate a Corporate Insolvency Resolution Process (CIRP) against Motion Education Private Limited, the Corporate Debtor/Respondent. The application was based on an agreement between the parties for the creation of educational online content, for which Prepladder had advanced Rs. 3,78,00,000/- and later Rs. 45,00,000/- to Motion Education. The Corporate Debtor argued that the transaction was for service provision, not a financial debt, and therefore the application was not maintainable.

## Facts

Prepladder Private Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against Motion Education Private Limited (Corporate Debtor). An agreement was made on 2019-09-24 between Prepladder and Motion Education for the launch of a new product, with Prepladder advancing Rs. 3,78,00,000 on 2019-09-30 to Motion Education for services. Motion Education issued invoices acknowledging the advances. Motion Education argued that the transaction was for service provision, not a financial debt, as they were to create educational online content for Prepladder's application 'WePrep'. The Corporate Debtor filed its reply on 2022-03-31. The applicant later paid an additional sum of Rs. 45,00,000/- as advance.

## Issues and analysis

### Issue 1: Whether an advance payment in lieu of services to be availed at a later stage can be categorized as …

**Ratio:** A debt arising out of advance payment made to a corporate debtor for the supply of goods

…

**Reasoning:** The Adjudicating Authority relied on the Supreme Court's judgment, which categorically

…

**Interpretation:** The interpretation of 'operational debt' includes debts arising from advance

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**Application:** Since Prepladder's advance payment to Motion Education was for services

…

## Parties

- **Judges:** Deep Chandr…; Prasanta Kumar…
- **Appellants:** Prepladder…
- **Respondents:** Motion Education…

## Timeline

- **2019-09-24 — Agreement between…**: An agreement was made between Prepladder and Motion Education for the launch of a new…
- **2019-09-30 — Advance Payment by…**: Prepladder advanced Rs. 3,78,00,000/-…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(7) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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