# In the matter of Shyam Metalics And Energy Ltd. Vs. Rathi Steel And Power Ltd. CA(AT)(Insolvency) 130-2019

> NCLAT judgment dated 2019-08-29. Citation: TCN-2019-NCLAT-00330. Shyam Metalics and Energy Limited, the Operational Creditor, filed a CP No.(IB)-1326(ND)/2018…

- **Court:** NCLAT
- **Order date:** 29 Aug 2019
- **Citation:** TCN-2019-NCLAT-00330
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/shyam-metalics-and-energy-ltd-vs-rathi-steel-and-power-ltd-ca-009177b7

## Summary

### Background

Shyam Metalics and Energy Limited, the Operational Creditor, filed a CP No.(IB)-1326(ND)/2018 before the NCLT, New Delhi Bench, against Rathi Steel and Power Limited, the Corporate Debtor, under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming a default of Rs.1,12,63,389/-. The Adjudicating Authority rejected the application on 20.12.2018, citing arbitration proceedings and the Appellant's failure to satisfy the Authority on the ground of limitation, as no proof of payments was made within three years of filing the Petition. The Corporate Debtor had placed purchase orders in 2012 and 2013, but payments were not made, and cheques issued in 2013 were dishonored. The Appellant issued a notice under Section 8 of IBC on 19th March, 2018, which the Respondent

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## Facts

Shyam Metalics and Energy Limited (Operational Creditor) claimed Rathi Steel and Power Limited (Corporate Debtor) defaulted on a debt of Rs.1,12,63,389/-. The Corporate Debtor placed purchase orders in 2012 and 2013, but payments were not made, and cheques issued in 2013 were dishonored. The Operational Creditor issued a notice under Section 8 of IBC on March 19, 2018, which the Corporate Debtor disputed. The Operational Creditor then issued another notice on June 13, 2018, and filed a petition under Section 9. The Corporate Debtor claimed a pre-existing dispute and substandard material supply, appointing an arbitrator on May 15, 2017. The Adjudicating Authority rejected the Section 9 application due to limitation and the existence of a pre-existing dispute. The

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was correct in rejecting the Section 9 application filed by the …

**Ratio:** The Adjudicating Authority can reject a Section 9 application if the operational creditor

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**Reasoning:** The Adjudicating Authority rejected the application because the Appellant failed to

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**Interpretation:** Section 9 of the IBC allows an operational creditor to initiate the corporate

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**Application:** In this case, the Adjudicating Authority found that there was a pre-existing

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## Parties

- **Judges:** A.I.S. C…; S.J. Mukhop…; +1 more
- **Appellants:** Shyam Metalics…
- **Respondents:** Rathi Steel and…
- **Advocates:** Abhijeet…; Aditya S…; +5 more

## Timeline

- **2012-01-01 — Purchase Order…**: The Corporate Debtor placed three purchase orders with the Operational Creditor in 2012…
- **2013-01-01 — Cheques Issued and…**: Various cheques issued in 2013 by the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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