Punj Lloyd Aviation Ltd Vs. Chipsan Aviation Private Limited - Section 5(21) has to be interpreted in a broad and purposive manner in order to include all those who provide or receive operational services from the Corporate Debtor which ultimately leads to an operational debt.

Supreme Court (27.01.2023) In Punj Lloyd Aviation Ltd Vs. Chipsan Aviation Private Limited [Civil Appeal No 306 of 2023] held that;

• Section 5(21) has to be interpreted in a broad and purposive manner in order to include all those who provide or receive operational services from the Corporate Debtor which ultimately leads to an operational debt.

Excerpts of the order; 

# 1 By its order dated 6 January 2022, the National Company Law Tribunal, while construing the provisions of Section 5(20) and Section 5(21) of the Insolvency and Bankruptcy Code 20162 held as follows:

• “It is an admitted position that in the instant case, it is the corporate debtor who is the service provider and not  operational creditor and operational creditor has only filed the present petition on the basis of an advance payment paid by the Operational Creditor and not refunded by the Corporate Debtor. The said advance does not fall within the four comers of Operational Debt. Therefore, we are of the opinion that the alleged debt is not an, "Operational Debt' as defined u/s 5(21) of IBC, 2016. Hence, the Present Petition is dismissed without any cost.”

# 2 The National Company Law Appellate Tribunal3 has reversed the above decision while relying upon the decision of this Court in Consolidated Construction Consortium Limited vs Hitro Energy Solutions Private Limited (2022) 7 SCC 164, where it has been held that Section 5(21) has to be interpreted in a broad and purposive manner in order to include all those who provide or receive operational services from the Corporate Debtor which ultimately leads to an operational debt.

# 3 The NCLT in its original order had not considered the other defences that were raised by the applicant to the application under Section 9 of the IBC. Hence, on remand, all the rights and contentions of the parties on the merits of the case are kept open to be urged before and decided by the NCLT. 

# 4 Subject to the aforesaid clarification, the Civil Appeal is disposed of. 

# 5 Pending applications, if any, stand disposed of.

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