Legal Insight + Business Instinct

Operational Creditor can initiate Corporate Insolvency Resolution Process for debts arising out of advance payment for supply of goods

Pratice Area

A Full bench of the Hon’ble Supreme Court of India (SC), comprising of Hon’ble Dr. Justice D.Y. Chandrachud, Hon’ble Mr. Justice Surya Kant and Hon’ble Mr. Justice Vikram Nath, in their order dated 04.02.2022 in M/s Consolidated Construction Consortium Limited v. M/s Hitro Energy Solutions Private Limited (Civil Appeal No. 2839 of 2020), held that a debt arising out of advance payment made to a corporate debtor, for supply of goods or services, would be considered as an operational debt, as such debt is arising from a contract in relation to the supply of goods or services from the corporate debtor. The SC further, relying on its earlier ruling in B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates, held that the period of limitation commences from the date of default, and not from the date when debt becomes due.


By browsing this website, you agree that you are, of your own accord, seeking further information regarding Sirius Legal. No part of this website should be construed as an advertisement of or solicitation for our professional services. No information provided on the website shall be construed as legal advice.

This website has been designed only for the purposes of dissemination of basic information on Sirius Legal, as well as other information which is otherwise available on the internet, various public platforms and/or social media. Careful attention has been given to ensure that the information provided on the website is accurate and updated. However, Sirius Legal is not responsible for any reliance that a reader places on such information, and it shall not be liable for any loss or damage caused due to any inaccuracy in, or exclusion of, any information, or its interpretation thereof. In case of any legal issues, we recommend seeking legal advice.