Operational debt under the Insolvency Code cannot rest on purchase-price adjustments or return-of-goods claims.

An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 can be maintained only by an operational creditor in respect of an operational debt arising from the provision of goods or services. On the facts, the claim was based on credit notes reducing the purchase price of goods already received and a debit note linked to the return of watches. Those adjustments did not constitute an operational debt, because they did not arise from a supply of goods or services as contemplated by the Code. The applicant therefore failed to establish the foundational requirement to invoke the corporate insolvency process, and the Section 9 application was rejected.

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Issues: Whether the applicant established that it was an operational creditor and that an operational debt was owed so as to maintain an application under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis: An application under Section 9 can be maintained only by an operational creditor in respect of an operational debt. The definition of operational debt covers claims arising from the provision of goods or services. On the facts, the applicant's claim related to credit notes reducing the purchase price of goods already received and to a debit note concerning return of watches. Such claims did not amount to a debt arising from provision of goods or services. The applicant therefore failed to establish the foundational requirement for invoking the corporate insolvency process under Section 9.

Conclusion: The applicant was not an operational creditor and no operational debt was shown to be due to it. The Section 9 application was rejected.

Ratio Decidendi: A claim that merely adjusts purchase price through credit notes, or seeks adjustment on return of goods, is not an operational debt arising from the provision of goods or services for the purposes of Section 9 of the Insolvency and Bankruptcy Code, 2016.

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