# In the matter of VETPharma Ltd. IA 853-2020 in CP (IB)-141-(MB)-2020

> NCLT judgment dated 2022-05-02. Citation: TCN-2022-NCLT-02929. The case involves a Company Petition filed by Prashant Electricals Ltd. (Operational Creditor)…

- **Court:** NCLT
- **Order date:** 2 May 2022
- **Citation:** TCN-2022-NCLT-02929
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/vetpharma-ltd-ia-853-2020-in-cp-ib-141-mb-2020-a0b32c90

## Summary

### Background

The case involves a Company Petition filed by Prashant Electricals Ltd. (Operational Creditor) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against VETPharma Ltd. (Corporate Debtor) for default in payment of invoices. The Operational Creditor claimed an operational debt of Rs.12,93,143/- plus interest based on a decree dated 23.07.2019. The Operational Creditor had supplied materials to the Corporate Debtor between 09.02.2016 and 27.06.2016, raising invoices aggregating to Rs.13,84,343/-, against which an advance payment of Rs.3,62,000/- was made on 22.01.2016, leaving a balance of Rs.10,22,343/-. The Operational Creditor had previously filed a Special Civil Suit No. 39 of 2017, resulting in a decree in their favor.

## Facts

Prashant Electricals Ltd. (Operational Creditor) filed a petition to initiate CIRP against VETPharma Ltd. (Corporate Debtor) due to unpaid invoices. The Operational Creditor supplied materials to the Corporate Debtor between 09.02.2016 and 27.06.2016, raising invoices totaling Rs.13,84,343/-. An advance payment of Rs.3,62,000/- was made on 22.01.2016, leaving a balance of Rs.10,22,343/-. The Operational Creditor obtained a decree on 23.07.2019 for Rs.12,93,143/- plus interest. A demand notice was sent on 19.09.2019 under Section 8 of the IBC. The Operational Creditor also filed IA 853/2020 seeking an injunction against the Corporate Debtor from selling property to Bajaj Healthcare. The Corporate Debtor was set ex parte. The key fact is that the debt was based on a

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## Issues and analysis

### Issue 1: Whether the decree holder, Prashant Electricals Ltd., qualifies as a Financial Creditor or an …

**Ratio:** The Supreme Court in Subhankar Bhowmik Versus Union of India & Anr held that decree

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**Reasoning:** The NCLT reasoned that Section 6 of the IBC allows only Financial Creditors, Operational

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**Interpretation:** The IBC recognizes decree holders as creditors but does not classify them as

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**Application:** Applying the Supreme Court's ruling and the provisions of Section 6 of the IBC

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## Parties

- **Judges:** H. V. Sub…; Chandra Bha…
- **Appellants:** Prashant Electrica…
- **Respondents:** VETPharma…
- **Advocates:** Devul D…; Yash Pa…

## Timeline

- **2016-01-22 — Advance P…**: Corporate Debtor made an advance payment…
- **2016-02-09 — Invoice Perio…**: Start date of the period during which Prashant Electricals Ltd. supplied materials to…

## 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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