# In the matter of Mr. Palaparty Abhishek
Suspended Director of M/s Abhirama Steels Ltd.
Vs. Binjusaria Ispat Pvt. Ltd. & Anr. Company Appeal (AT) (CH) (Ins) No. 19 of 2022

> NCLAT judgment dated 2022-07-08. Citation: TCN-2022-NCLAT-00380. The case involves an appeal against the order dated 16th November 2021 passed by the…

- **Court:** NCLAT
- **Order date:** 8 Jul 2022
- **Citation:** TCN-2022-NCLAT-00380
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/mr-palaparty-abhishek-suspended-director-of-ms-abhirama-steels-ltd-vs-binjusaria-fd60834c

## Summary

### Background

The case involves an appeal against the order dated 16th November 2021 passed by the Adjudicating Authority / National Company Law Tribunal, Hyderabad Bench-I, Hyderabad in CP (IB) No. 525/9/HDB/2019, which admitted an application filed by Binjusaria Ispat Pvt. Ltd. (Respondent No.1) against Abhirama Steels Ltd. (Corporate Debtor). The Appellant, Mr. Palaparty Abhishek, representing Abhirama Steels Ltd., argued that the Adjudicating Authority's order was erroneous. The dispute arose from an alleged default on an oral purchase order for mild steel billets, with the Appellant claiming the goods supplied were of inferior quality and the claims were time-barred. The Respondent contended that the debt arose from a Memorandum of Understanding (MoU) dated 13.02.2016, and the

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## Facts

Mr. Palaparty Abhishek, representing Abhirama Steels Ltd., appealed against an order admitting an insolvency application filed by Binjusaria Ispat Pvt. Ltd. The dispute originated from an alleged oral purchase order for mild steel billets. Binjusaria Ispat Pvt. Ltd. claimed Abhirama Steels Ltd. defaulted on payments for invoices raised between 2015 and 2016, totaling Rs.1,77,15,636/-. Abhirama Steels Ltd. contended the supplied goods were of inferior quality and informed Binjusaria Ispat Pvt. Ltd. to rectify the issue. A Memorandum of Understanding (MoU) was drafted on 13.02.2016, where Abhirama Steels Ltd. agreed to repay the amount by 29.02.2016. Abhirama Steels Ltd. issued cheques that were later dishonored. Binjusaria Ispat Pvt. Ltd. initiated proceedings under

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority's order admitting the application filed by the Respondent was in …

**Ratio:** The Adjudicating Authority can admit an application if a debt and default are proven, and

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**Reasoning:** The Tribunal found that the debt and default were proven based on the MoU and the

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**Interpretation:** The law requires the Adjudicating Authority to determine whether a debt exists

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**Application:** In this case, the existence of the MoU and the dishonored cheques established

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## Parties

- **Judges:** Venugop…; KanthiNar…
- **Appellants:** PALAPARTY A…
- **Respondents:** Abhirama Steels…; Binjusaria Ispat…

## Timeline

- **2016-02-13 — Memorandum of…**: MoU was drafted where Abhirama Steels Ltd.…
- **2016-04-04 — Cheques Dis…**: Cheques issued by Abhirama…

## 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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