EXISTENCE OF PRINCIPAL-AGENT RELATIONSHIP BETWEEN THE PARTIES BARS APPLICATION U/S 9 OF IBC: NCLT MUMBAI. In the case of THG Publishing Pvt. Ltd. v. Deadline Advertising Pvt. Ltd., the operational creditor THG Publishing Pvt. Ltd. filed an application for initiation of Corporate Insolvency Resolution Process (CIRP) under section 9 of IBC, against the respondent, Delhi Advertising Pvt. Ltd. for resolution of an operational debt. The respondent argued that the operational creditor and respondent both shared a principal-agent relationship, wherein the operational creditor was a principal who appointed the respondent as an agent to engage customers who are desirous of publishing their advertisement with the Operational Creditor. A dispute between the two arose when a client of the respondent, Avanse Financial Services Pvt. Ltd. failed to make payments to the respondent. The tribunal observed that there existed a principal-agent relationship between the operational creditor and respondent and also it noted that the client of the Respondent, Avanse Financial Services Pvt. Ltd. approached the Respondent via an intermediate agency to get its advertisement published in the operational creditors newspaper, and the client failed to pay the amount to the respondent , thereupon the respondent was unable to pay to the operational creditor, hence the operational creditor must have initiated legal proceedings against Avanse Financial Services Pvt. Ltd. to recover the amount. Therefore, the NCLT Mumbai Bench dismissed the application, as the debt of the operational Creditor did not qualify as an operational debt u/s 5(8) and is not a default u/s 3(12) of IBC. Reddy and Reddy Law Firm provides a wide range of corporate legal services ranging from incorporation to winding up and all the legal compliances related to it. We are regularly involved in representations before NCLT, NCLAT, DRT, DRAT and other commercial tribunals in India.