# In the matter of Sakthi Ganesh Textiles Pvt. Ltd.

> NCLT judgment dated 2024-07-31. Citation: TCN-2024-NCLT-00904. The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 31 Jul 2024
- **Citation:** TCN-2024-NCLT-00904
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sakthi-ganesh-textiles-pvt-ltd-723ed4e1

## Summary

### Background

The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Ms. Babitha Sancheti, Proprietor of M/s. Pioneer Enterprises (Operational Creditor), against M/s. Sakthi Ganesh Textiles (P) Limited (Corporate Debtor) for initiation of Corporate Insolvency Resolution Process (CIRP). The Operational Creditor claimed a default on payments for the supply of cotton bales. The Corporate Debtor allegedly defaulted since June 2022, leading to a total debt of Rs.3,83,01,309/- as of 25.10.2023, including principal and interest. The Operational Creditor issued demand notices, which were returned undelivered or refused. The Corporate Debtor raised disputes regarding the quality of goods and coercion in obtaining a balance confirmation

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## Facts

Ms. Babitha Sancheti, operating as M/s. Pioneer Enterprises, is in the business of trading cotton bales and seeds. M/s. Sakthi Ganesh Textiles (P) Limited is engaged in the textile industry. The Operational Creditor supplied cotton bales to the Corporate Debtor through a broker, M/s. Bhavesh Cotton Company. Sales confirmations were issued, and invoices were raised. The payment terms were 30-40 days from the invoice date. The Corporate Debtor allegedly defaulted on payments since June 2022. On 25.04.2023, the Corporate Debtor confirmed its liability of Rs. 3,18,66,758.00 via a balance confirmation letter. The reason for non-payment was cited as a downturn in the textile industry. The Operational Creditor issued demand notices on 25.10.2023. The demand notice sent to the

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## Issues and analysis

### Issue 1: Whether the application filed under Section 9 of the IBC is maintainable for initiation of CIRP …

**Ratio:** Section 9 of the IBC allows an operational creditor to initiate CIRP against a corporate

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**Reasoning:** The Adjudicating Authority found that the Operational Creditor had demonstrated the

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**Interpretation:** Section 9 provides the mechanism for operational creditors to trigger the

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**Application:** The Adjudicating Authority applied Section 9 to the facts, finding that the

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## Parties

- **Judges:** SANJIV…; Venkataraman…
- **Appellants:** Babitha Sa…
- **Respondents:** Sakthi Ganesh…

## Timeline

- **1996-03-08 — Incorporation of…**: M/s. Sakthi Ganesh Textiles…
- **2022-06-01 — Default in P…**: Alleged commencement of default in payments by the Corporate Debtor to the Operational…

## 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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