# In the matter of Narbada Forest Industries Private Limited TP (MP) 26 of 2019 {CP (IB) 668 of 2019}

> NCLT judgment dated 2022-11-03. Citation: TCN-2022-NCLT-00536. The case involves an application filed by Permali Wallace Pvt Ltd (Operational Creditor)…

- **Court:** NCLT
- **Order date:** 3 Nov 2022
- **Citation:** TCN-2022-NCLT-00536
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/narbada-forest-industries-private-limited-tp-mp-26-of-2019-cp-ib-668-of-2019-6454d758

## Summary

### Background

The case involves an application filed by Permali Wallace Pvt Ltd (Operational Creditor) against Narbada Forest Industries Pvt Ltd (Corporate Debtor) under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The claim pertains to a default in payment of interest amounting to Rs 1,28,82,040/- on an original operational debt of Rs 1,74,16,527/-. Previously, a similar application was filed and withdrawn based on a settlement agreement. The Corporate Debtor has already paid the principal operational debt and a portion of the interest (Rs 16 Lakhs).

## Facts

Permali Wallace Pvt Ltd (Operational Creditor) filed an application under Section 9 of the IBC against Narbada Forest Industries Pvt Ltd (Corporate Debtor) for default in payment of interest. The original operational debt was Rs 1,74,16,527/-, and the claimed interest was Rs 1,28,82,040/-. A prior application under Section 9 was withdrawn due to a settlement agreement. The Corporate Debtor paid the principal amount of Rs 1,74,16,527/- and Rs 16 Lakhs towards interest. The Operational Creditor claimed a breach of the settlement agreement, seeking the remaining interest. The Corporate Debtor argued that the entire debt amount was paid and the application was a misuse of the IBC. The settlement agreement, dated 07.11.2017, was central to the dispute. The invoices

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## Issues and analysis

### Issue 1: Whether the application under Section 9 of the IBC is maintainable for the recovery of a disputed …

**Ratio:** An application under Section 9 of the IBC is intended for the resolution of insolvency

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**Reasoning:** The court reasoned that the Operational Creditor was attempting to use the IBC

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**Interpretation:** Section 9 of the IBC should be interpreted in light of the overall objective of

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**Application:** The court applied this principle to the facts by noting that the principal

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## Parties

- **Judges:** Madan B.…; KAUSHALENDRA…
- **Appellants:** Permali Wallace…
- **Respondents:** Narbada Forest…

## Timeline

- **2017-11-07 — Settlement Ag…**: Settlement agreement was…
- **2017-11-08 — Withdrawal of Previous…**: Operational Creditor withdrew the previous application under Section 9 of IBC based on…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(21) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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