# Smile Nonwovens Private Limited vs. T. K. Engineering Consortium Private Limited

> NCLT judgment dated 30 Apr 2026. Citation: TCN-2026-NCLT-00497. Smile Nonwovens Private Limited (Operational Creditor, OC) filed a Section 9 application under…

- **Court:** NCLT
- **Order date:** 30 Apr 2026
- **Citation:** TCN-2026-NCLT-00497
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-kolkata/smile-nonwovens-private-limited-vs-t-k-engineering-consortium-private-limited-wzqd1

## Summary

### Background

Smile Nonwovens Private Limited (Operational Creditor, OC) filed a Section 9 application under the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP) against T.K. Engineering Consortium Private Limited (Corporate Debtor, CD). The OC claimed an outstanding operational debt of Rs 2,64,67,527/- plus 18% p.a. interest, stemming from the supply of geo-bags and non-woven geotextile fabrics under a Memorandum of Understanding dated 02.03.2019 and a Purchase Order dated 20.11.2020. The CD defaulted on payments, making its last payment of Rs. 1 crore on 11.04.2022. The OC issued a demand notice on 19.06.2025. The CD challenged the application, contending it was time-barred, that payment was contingent upon realization of

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## Facts

Smile Nonwovens Private Limited (Operational Creditor) filed an application under Section 9 of the IBC, 2016, to initiate CIRP against T.K. Engineering Consortium Private Limited (Corporate Debtor).

The Operational Creditor claimed an outstanding principal amount of Rs 2,64,67,527/- with 18% p.a. interest.

The parties had a business relationship for the supply of Mega Bags and geotextile fabrics, formalized by an MoU dated 02.03.2019 and a purchase order dated 20.11.2020.

The Corporate Debtor issued security cheques for Rs. 5,00,00,000/- towards existing outstanding dues as on November 2020 and for future supplies.

The first default occurred on 15.05.2021 (invoice 15.04.2021), and the last default on 05.12.2021 (invoice 05.11.2021).

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## Issues and analysis

### Issue 1: Whether an operational …

**Ratio:** An operational debt and default exist when the Operational Creditor substantiates the

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**Reasoning:** The Tribunal found the Purchase Order to be the primary contractual document stipulating

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**Interpretation:** The "pay-when-paid" clause argument by the Corporate Debtor was

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**Application:** The OC provided the MoU, Purchase Order, invoices, lorry receipts, GST returns,

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## Parties

- **Judges:** Rammurti Ku…; Yogendra Kumar…
- **Appellants:** Smile Nonwovens…
- **Respondents:** T. K. Engineering…
- **Other parties:** Insolvency and…; Corporate…; +9 more

## Timeline

- **2019-03-02 — MoU Exec…**: Memorandum of Understanding (MoU) executed between Smile Nonwovens Private Limited and T.…
- **2020-11-20 — Purchase Orde…**: Corporate Debtor issued a…

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