# In the matter of Vivin Drugs & Pharmaceuticals Private Limited.

> NCLT judgment dated 2024-11-11. Citation: TCN-2024-NCLT-00279. M/s. Sanchi Fine Chem Corp, an operational creditor, filed a company petition under Section 9…

- **Court:** NCLT
- **Order date:** 11 Nov 2024
- **Citation:** TCN-2024-NCLT-00279
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/vivin-drugs-pharmaceuticals-private-limited-02effd0c

## Summary

### Background

M/s. Sanchi Fine Chem Corp, an operational creditor, filed a company petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Vivin Drugs & Pharmaceuticals Ltd, the corporate debtor, for defaulting on a payment of Rs. 3,66,91,729/-. The operational creditor claimed to have supplied chemicals based on purchase orders from the corporate debtor, who acknowledged receipt but failed to make the necessary payments. The corporate debtor refuted the allegations, claiming a verbal agreement for extended payment terms due to temporary cash flow issues and arguing that the operational creditor acted in bad faith by initiating insolvency proceedings.

## Facts

M/s. Sanchi Fine Chem Corp, the operational creditor, is a partnership firm engaged in selling chemicals. Vivin Drugs & Pharmaceuticals Ltd, the corporate debtor, is a pharmaceutical company. The operational creditor supplied chemicals to the corporate debtor based on purchase orders issued between 04.07.2023 and 27.11.2023. The corporate debtor acknowledged receiving the materials but failed to pay Rs. 3,66,91,729/- along with interest. The operational creditor issued demand notices on 17.04.2024, which the corporate debtor did not respond to. The corporate debtor claimed a verbal agreement for extended payment terms due to cash flow issues and offered to reconcile accounts. The operational creditor disputed this claim and initiated insolvency proceedings. The

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## Issues and analysis

### Issue 1: Whether there is an 'operational Debt' of a sum exceeding rupees one crore, due and payable by the …

**Ratio:** Section 5(21) of the Insolvency and Bankruptcy Code (IBC) defines 'operational debt' as a

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**Reasoning:** The NCLT observed that the operational creditor received purchase orders from the

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**Interpretation:** The definition of 'operational debt' under Section 5(21) of the IBC is

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**Application:** In this case, the NCLT applied the definition of 'operational debt' to the

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Appellants:** M/s. Sanchi Fine…
- **Respondents:** Vivin Drugs &…
- **Advocates:** V. Appa…; G Sum…

## Timeline

- **2023-07-04 — Purchase Order…**: The corporate debtor issued purchase orders to the operational creditor between…
- **2023-07-10 — Tax Invoices…**: The operational creditor issued tax invoices for the supplied chemicals between…

## 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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