# In the matter of Indo Alusys Industries Limited Vs. SMW Metal Private Limited CA(AT)(Ins) No. 409 of 2019

> NCLAT judgment dated 2020-02-13. Citation: TCN-2020-NCLAT-00407. This case involves an appeal against an order dated 12th February, 2019, passed by the…

- **Court:** NCLAT
- **Order date:** 13 Feb 2020
- **Citation:** TCN-2020-NCLAT-00407
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/indo-alusys-industries-limited-vs-smw-metal-private-limited-ca-746d3a93

## Summary

### Background

This case involves an appeal against an order dated 12th February, 2019, passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench, which dismissed petitions filed by both Indo Alusys Industries Limited (Appellant) and SMW Metal Private Limited (Respondent) under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Appellant, claiming to be an operational creditor, filed an application against the Respondent, the corporate debtor, for operational dues. The Respondent also filed a cross-application against the Appellant. The Adjudicating Authority dismissed both petitions, leading to the present appeal.

## Facts

Indo Alusys Industries Limited (Appellant) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, against SMW Metal Private Limited (Respondent), claiming operational dues of Rs. 13,76,36,931/-. The Respondent also filed a cross-application claiming Rs. 2,43,34,100/- as principal amount with interest. The Appellant and Respondent had long-standing business dealings involving the sale and purchase of Aluminum Extrusions and Ingots. The Appellant claims that the Respondent acknowledged the liability through Credit Notes amounting to Rs. 24,86,67,626/- and a Memorandum of Understanding (MoU) dated 25th January, 2016. An Indemnity Bond was also executed on the same date. The Respondent terminated the MoU via letter dated 17th April, 2018. The

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was correct in dismissing the application under Section 9 of the …

**Ratio:** A pre-existing dispute bars the initiation of the Corporate Insolvency Resolution Process

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**Reasoning:** The Adjudicating Authority found that there was a contested dispute between the parties

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**Interpretation:** Section 9 of the IBC is designed for cases where the debt and default are clear

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**Application:** In this case, the Adjudicating Authority found that the Respondent had disputed

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## Parties

- **Judges:** A.I.S. C…; Kanthi Na…; +1 more
- **Appellants:** Indo Alusys…
- **Respondents:** SMW Metal Private…

## Timeline

- **2016-01-25 — MoU and Indemnity Bond…**: Memorandum of Understanding (MoU) and Indemnity Bond executed between Indo Alusys…
- **2017-05-02 — Appellant's Reply to…**: Appellant sent reply to the…

## 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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