Insolvency and Bankruptcy Code, 2016: ss.5(20), 5(21), 8(1) – Operational creditor – Meaning of – Appellant was engaged by CMRL for a project – For the said project, appellant entered into a contract for supply of light fittings with a Proprietary Concern (P.C.) – CMRL, on appellant’s behalf, paid a sum of Rs 50 lakhs to P.C. as an advance – However, CMRL terminated its project with the appellant – The communication of termination was given to P.C., however P.C. encashed the cheque for Rs 50 lakhs – Appellant paid the sum of Rs 50 lakhs to CMRL and requested P.C. to make the payment – Meanwhile, respondent was incorporated and it took over P.C. – Appellant sent demand notice under s.8 of the IBC to the respondent – Respondent denied that any debt was owed by them to the appellant – Appellant filed application u/s.9 of IBC r/w r.6 IBC Rules 2016 which was admitted by NCLT and Interim Resolution professional appointed – NCLAT set aside the NCLT’s decision and dismissed the application of appellant – On appeal, held: Operational creditors are those whose debt arises from operational transactions i.e transactions involving goods or services which are considered necessary for the operational functioning of an entity – s.5(21) defines ‘operational debt’ as a “claim in respect of the provision of goods or services – The operative requirement is that the claim must bear some nexus with a provision of goods or services, without specifying who is to be the supplier or receiver – s.8(1) of the IBC r/w r.5(1) and Form 3 of the 2016 Application Rules makes it abundantly clear that an operational creditor can issue a notice in relation to an operational debt either through a demand notice or an invoice – The presence of an invoice is not a sine qua non, since a demand notice can also be issued on the basis of other documents which prove the existence of the debt – A debt which arises out of advance payment made to a corporate debtor for supply of goods or services would be considered as an operational debt – Appellant had sought an operational service from P.C. when it contracted with them for the supply of light fittings – Enchashment of cheque by P.C., even though the contract was terminated, gave rise to an operational debt in favor of the appellant – Hence, the appellant is an operational creditor under s.5(20) of the IBC. Companies Act, 2013: Memorandum of Association (MOA) – Evidentiary value of – A company’s MOA is its charter and outlines the purpose for which the company has been created – In the instant case, the MOA of the respondent unequivocally states that one of its main objects is to take over a Proprietary Concern (P.C.) – However, the respondent has produced a resolution purportedly to not take over P.C. – s.13 of Companies Act, 2013 provides the procedure for amendment of MOA – In case of amending an object clause, it requires the Registrar to register the Special Resolution filed by the company – However, respondent provided no proof for the above amendment – MOA of the respondent still stands. Limitation Act, 1963: Maintainability of IBC application – Limitation does not commence when the debt becomes due but only when a default occurs – Default is defined under s.3(12) of the IBC as the non-payment of the debt by the corporate debtor when it has become due – CMRL issued a cheque of Rs 50 lacs to a Proprietary Concern (P.C.) on 7 November 2013 as an advance payment for the purchase – After termination of contract, correspondence was exchanged between the appellant and P.C. – Final letter demanding payment from P.C. was addressed on 27 February 2017 which was refused by appellant on 2 March 2017 – On 1 November 2017, appellant filed an application u/s.9 of IBC which is within three years from default – Hence, application u/s.9 of IBC is not barred by limitation – Insolvency and Bankruptcy Code, 2016 – s.9.