# In the matter of A.D. Electro Steel Co. Pvt. Ltd. & Anr. Vs. Anil Steels (Operational Creditor) CA (AT) No. 194-2017

> NCLAT judgment dated 2017-10-06. Citation: TCN-2017-NCLAT-00109. The case involves an appeal against an order by the Adjudicating Authority (National Company…

- **Court:** NCLAT
- **Order date:** 6 Oct 2017
- **Citation:** TCN-2017-NCLAT-00109
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/ad-electro-steel-co-pvt-ltd-anr-vs-anil-steels-c87d1935

## Summary

### Background

The case involves an appeal against an order by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, which admitted an application for Corporate Insolvency Resolution Process (CIRP) against the Appellants-'Corporate Debtor' based on Section 9 of the Insolvency and Bankruptcy Code (I&B Code). The Respondent-'Operational Creditor' had filed the application. The Appellants-'Corporate Debtor' contended that a pre-existing dispute existed, rendering the application under Section 9 not maintainable.

## Facts

A.D. Electro Steel Co. Pvt. Ltd. & Anr. (Appellants-'Corporate Debtor') faced an application for Corporate Insolvency Resolution Process (CIRP) filed by Anil Steels (Respondent-'Operational Creditor') under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, admitted the application on September 7, 2017. The Appellants-'Corporate Debtor' appealed, arguing that a dispute existed prior to the application. The Respondent-'Operational Creditor' issued a notice dated June 15, 2016, under Section 138 of the Negotiable Instrument Act, 1881, making certain claims. The Appellants-'Corporate Debtor' replied on June 28, 2016, raising a dispute about the supply of Buffer Plunger (Wagon) Casting and

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## Issues and analysis

### Issue 1: Whether the existence of a pre-existing dispute between the operational creditor and the corporate …

**Ratio:** The ratio is derived from the Supreme Court's judgment in "Mobilox Innovations

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**Reasoning:** The court reasoned that the legislative intent of the I&B Code is to prevent

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**Interpretation:** The interpretation of Section 8 and 9 of the I&B Code, as clarified by the

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**Application:** In this case, the court found that a dispute existed between A.D. Electro Steel

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## Parties

- **Judges:** S.J. Mukhop…; A.I.S. C…; +1 more
- **Appellants:** A.D. Electro…
- **Respondents:** A.D. Electro…; Anil St…
- **Advocates:** P. Na…; A.K.J…; +4 more

## Timeline

- **2016-06-15 — Demand Notice…**: Anil Steels (Operational Creditor) issued a notice under Section 138 of the Negotiable…
- **2016-06-28 — Dispute R…**: A.D. Electro Steel Co. Pvt. Ltd. & Anr. (Corporate Debtor) replied to the demand notice,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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