# In the matter of Railsys Engineers Private Limited C.P. (I.B) No. 367 of 2022

> NCLT judgment dated 2023-03-24. Citation: TCN-2023-NCLT-04059. Manoj Stone Infra Private Limited, the Operational Creditor, filed a Company Petition seeking…

- **Court:** NCLT
- **Order date:** 24 Mar 2023
- **Citation:** TCN-2023-NCLT-04059
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/railsys-engineers-private-limited-cp-ib-no-367-of-2022-ca25a7e3

## Summary

### Background

Manoj Stone Infra Private Limited, the Operational Creditor, filed a Company Petition seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Railsys Engineers Private Limited, the Corporate Debtor, under Section 9 of the Insolvency and Bankruptcy Code, 2016. The petition was based on an unresolved operational debt of Rs. 1,94,41,234/-. The Corporate Debtor opposed the admission of the petition, contending a pre-existing dispute and arguing that the nature of the debt was not an 'Operational Debt'.

## Facts

Manoj Stone Infra Private Limited (Operational Creditor) claimed that Railsys Engineers Private Limited (Corporate Debtor) owed them Rs. 1,94,41,234/- for the supply of signaling cables and kyosan made electronic interlocking items. The Corporate Debtor issued a purchase order on 02.03.2021, and the goods were supplied in March 2021, received on 29.03.2021. The Operational Creditor raised two invoices totaling Rs 2,57,26,234/- and requested payment on 06.04.2021. After repeated requests, the Corporate Debtor paid Rs. 62,85,000/-, leaving Rs. 1,94,41,234/- outstanding. The Operational Creditor issued a demand notice on 08.02.2022. The Corporate Debtor argued that the transaction was part of a profit-sharing arrangement, not a simple supply of goods, and that there were

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## Issues and analysis

### Issue 1: Whether the debt claimed by the Petitioner falls …

**Ratio:** Section 9 proceedings are not meant for adjudicating contractual disputes arising out of

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**Reasoning:** The NCLT found that the claim arose out of a mutual business understanding of a

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**Interpretation:** An 'Operational Debt' is interpreted as a straightforward debt arising from the

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**Application:** Since the NCLT determined that the debt was linked to a partnership arrangement

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## Parties

- **Judges:** H.V. Subb…; Madhu S…
- **Appellants:** Manoj Stone Infra…
- **Respondents:** Railsys Engineers…
- **Advocates:** Nirman Sh…; Akshay P…

## Timeline

- **2021-03-02 — Purchase Orde…**: The Corporate Debtor issued a Purchase order to the Petitioner for supply of signaling…
- **2021-03-01 — Goods Sup…**: The Petitioner supplied goods to the Corporate Debtor in the month of March, 2021. The…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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