Operational Debt Necessary For Goods Or Services To Be An Operational Creditor

Operational Debt Necessary For Goods Or Services To Be An Operational Creditor

National Company Law Appellate Tribunal found that the important ingredients were missing in the present case and dismissed the application

The National Company Law Appellate Tribunal (NCLAT) upheld the order passed by the National Company Law Tribunal (NCLT), Ahmedabad Bench, which dismissed an application u/S 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) against the Corporate Debtor.

The Principal Bench of the National Company Law Appellate Tribunal at New Delhi, comprising of Justice A.I.S. Cheema and Dr Alok Srivastav heard the matter titled Anand Natvarlal Khant v Kush Structure Pvt Ltd.

The facts of the case are that there was a construction agreement dated 27 October 2017, executed between the Appellant – Operational Creditor and Respondent – Corporate Debtor. The Appellant submitted that as per the agreement for carrying out construction, the Respondent was to pay 20 per cent to the Appellant on receiving a cheque from the Government. The Appellant further submitted that as per the Respondent's police statement, the Respondent had accepted the fact that the amounts had been received from the Government but 20 per cent of the amount was not paid to the Appellant as per the agreement. Thus, the Appellant had filed an application u/S 9 of the Insolvency and Bankruptcy Code before the National Company Law Tribunal, which was dismissed on the ground that there was no material of service rendered. The Appellant claimed that he was entitled to 20 per cent of the amount received by the Respondent under the construction agreement.

The bench went through the notice sent u/S 8 of the Insolvency and Bankruptcy Code by the Appellant to the Respondent with regard to the particulars of the operational debt and found that it did not show material as to service rendered.

The Appellate Tribunal found that the important ingredients were missing in the present matter and observed the following:

"Under the provisions of IBC, to be an Operational Creditor it is necessary to show that there is an operational debt which has to be a claim with regard to provision of goods or services."

Therefore, the Court declined to interfere with the order of the National Company Law Tribunal and dismissed the appeal.