# In the matter of Sumiran Foods Pvt. Ltd.

> NCLT judgment dated 2024-05-01. Citation: TCN-2024-NCLT-01506. The case involves a show-cause notice issued to Sumiran Foods Pvt. Ltd. regarding a potential…

- **Court:** NCLT
- **Order date:** 1 May 2024
- **Citation:** TCN-2024-NCLT-01506
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sumiran-foods-pvt-ltd-0cea6d56

## Summary

### Background

The case involves a show-cause notice issued to Sumiran Foods Pvt. Ltd. regarding a potential penalty under Section 65(1) of the IBC, 2016. This stems from a previous CIRP initiated by Sumiran Foods against Pankaj Events & Celebrations Pvt. Ltd., which was later found to be motivated by recovery rather than genuine insolvency resolution. The Tribunal observed that Sumiran Foods withdrew their claim and did not actively participate in the CIRP process after its initiation. The Joint Registrar was directed to issue the show cause notice.

## Facts

Sumiran Foods Pvt. Ltd. filed an application as an Operational Creditor under Section 9 of the IBC, 2016, to initiate CIRP against Pankaj Events & Celebrations Pvt. Ltd. Pankaj Events & Celebrations Pvt. Ltd. used to order food and related products from Sumiran Foods, and Sumiran Foods supplied these and raised invoices. Pankaj Events made ad-hoc payments, with the last payment on 2019-08-16. Sumiran Foods claimed that Pankaj Events failed to clear outstanding dues despite reminders, leading to the statutory notice and the filing of CP(IB) 838 of 2023. The CIRP was admitted, and a Resolution Professional was appointed. However, during the CoC meetings, the creditors withdrew their claims. Sumiran Foods also withdrew its claim. The Tribunal observed that Sumiran

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## Issues and analysis

### Issue 1: Whether the Operational Creditor, Sumiran Foods Pvt. Ltd., misused the CIRP process for recovery …

**Ratio:** Section 65(1) of the IBC, 2016, provides for penalties if the Insolvency Resolution

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**Reasoning:** The Tribunal observed that Sumiran Foods withdrew its claim and did not actively

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**Interpretation:** Section 65(1) of the IBC, 2016, is interpreted to prevent the misuse of the

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**Application:** The Tribunal applied the ratio of Section 65(1) of the IBC, 2016, to the facts

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## Parties

- **Judges:** Chitra Ha…; Velamur G Venkata…
- **Appellants:** Joint Reg…
- **Respondents:** Pankaj Events &…; Sumiran Foods…

## Timeline

- **2019-08-16 — Last Pay…**: Last payment made by Pankaj Events &…
- **2021-03-31 — CIRP All…**: CIRP against Pankaj Events &…

## 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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