The National Company Law Tribunal (NCLT), Delhi, has held that a petitioner cannot initiate the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) if the business arrangement between the parties involves joint participation and profit-sharing rather than a straightforward operational debt. The Tribunal ruled that such an arrangement does not establish a debtor-creditor relationship under the IBC.
A bench of Mahendra Khandelwal, Member (Judicial), and Dr. Sanjeev Ranjan, Member (Technical), held, “Had there been the relation of the Operational Creditor and the Corporate Debtor between the parties, there would have been no provision for the ‘profit sharing’ amongst them, as the…
