Case Note & Summary
The appeal was filed against an order dated 24.09.2025 by the National Company Law Tribunal (NCLT) rejecting the Appellant's application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (CD) due to alleged default in operational debt. The Appellant, Tech Lads India Private Limited, entered into a Consortium Agreement with Satnam Global Infraprojects Limited to bid for a project involving the supply and implementation of a vehicle monitoring system. The Appellant claimed to have made an advance payment of Rs. 8 crores to the CD for materials that were never supplied. The CD contended that the amount was a security deposit and not operational debt. The NCLT found that the Appellant failed to establish the existence of operational debt as defined under the IBC, leading to the dismissal of the application. The Appellant argued that the payment was made for supplies under the Consortium Agreement, while the CD maintained that there was no inter se commercial transaction. The court analyzed the terms of the Consortium Agreement and the nature of obligations between the parties, ultimately concluding that the Appellant did not meet the burden of proof required to establish operational debt. The appeal was dismissed, affirming the NCLT's decision that the application under Section 9 was not maintainable.
Headnote
A) Insolvency Law - Operational Debt - Definition and Applicability - Insolvency and Bankruptcy Code, 2016, Section 5(21) - The court examined whether the payment made by the Appellant constituted operational debt as defined under the IBC. It was held that the Appellant failed to establish the existence of operational debt, as the obligations were towards the performance of a project and not inter se commercial transactions. (Paras 17-19) B) Consortium Agreement - Nature of Obligations - Insolvency and Bankruptcy Code, 2016, Section 5(20) - The court analyzed the terms of the Consortium Agreement to determine the nature of obligations between the parties. It was concluded that the agreement did not create operational debt as defined under the IBC, leading to the dismissal of the application. (Paras 15-19) C) Demand Notice - Requirements for Validity - Insolvency and Bankruptcy Code, 2016, Section 8 - The court considered the validity of the Demand Notice issued by the Appellant. It was found that the Appellant did not provide sufficient evidence to support the claim of operational debt, resulting in the rejection of the application. (Paras 9-10)
Issue of Consideration
Whether the Appellant established the existence of operational debt under Section 9 of the Insolvency and Bankruptcy Code, 2016.
Final Decision
The appeal was dismissed, affirming the NCLT's order that the application under Section 9 was not maintainable due to failure to establish operational debt.
Law Points
- operational debt
- corporate insolvency resolution process
- consortium agreement
- insolvency and bankruptcy code
- demand notice
