In Brief
A contractor (appellant) placed orders for light fittings with a proprietorship firm for a Chennai Metro project. When the project was cancelled, the contractor paid the advance amount back to the client but the proprietorship firm refused to return it. The contractor later filed for insolvency against the respondent company, claiming the firm had been taken over. The Supreme Court held that the contractor qualified as an operational creditor because operational debt covers any transaction relating to goods or services—whether the creditor supplied or received them. The company's MOA stated it would take over the firm, creating a presumption of takeover absent formal amendment. The application was timely as limitation runs from default (final refusal) not from when debt fell due. The appeal was allowed.
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