# In the matter of Shaila Hospitality Private Limited

> NCLT judgment dated 2024-04-03. Citation: TCN-2024-NCLT-01845. M/s. Shree Sai Decorators, the Operational Creditor (OC), filed an application under Section 9…

- **Court:** NCLT
- **Order date:** 3 Apr 2024
- **Citation:** TCN-2024-NCLT-01845
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/shaila-hospitality-private-limited-a7dffb66

## Summary

### Background

M/s. Shree Sai Decorators, the Operational Creditor (OC), filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, against Shaila Hospitality Private Limited, the Corporate Debtor (CD), for initiating Corporate Insolvency Resolution Process (CIRP). The OC claimed that the CD defaulted on a payment of Rs. 1,00,00,000/- (One Crore Rupees) as of 30.08.2021. The OC and CD had entered into a Conducting Agreement dated 18.08.2017, where the OC was required to keep an interest-free security deposit of Rs. 1,10,00,000/- with the CD. The OC made payments totaling one crore rupees. The OC vacated the premises on 30.08.2021, and the CD was required to refund the security deposit but failed to do so.

## Facts

M/s. Shree Sai Decorators (Operational Creditor - OC) and Shaila Hospitality Private Limited (Corporate Debtor - CD) entered into a Conducting Agreement on 18.08.2017. As per the agreement, the OC was required to deposit Rs. 1,10,00,000/- as an interest-free security deposit with the CD. The OC made payments totaling Rs. 1,00,00,000/- to the CD between 17.07.2017 and 16.08.2017. The OC claims the balance of Rs. 10,00,000/- was not paid. The OC vacated the premises on 30.08.2021 and handed over possession to the CD. The CD was required to refund the security deposit upon vacating the premises. The CD failed to refund the security deposit. The OC issued a demand notice dated 28.01.2023, which was received by the CD on 02.02.2023. The CD did not reply to the demand notice

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## Issues and analysis

### Issue 1: Whether the application under Section 9 of the …

**Ratio:** Section 9 of the Insolvency and Bankruptcy Code, 2016 allows an operational creditor to

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**Reasoning:** The court found that the OC had established the existence of an operational debt, the CD

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**Interpretation:** Section 9 provides a mechanism for operational creditors to recover their dues

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**Application:** The court applied the provisions of Section 9 to the facts of the case and

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## Parties

- **Judges:** SHRI. K R SAJI…; Madhu S…
- **Appellants:** Shree Sai…
- **Respondents:** Shaila Hospitality…

## Timeline

- **2017-08-18 — Conducting Ag…**: OC and CD entered into a…
- **2017-07-17 — Payment…**: OC made the first payment…

## 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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