# In the matter of Sumilon Polyester Pvt. Ltd. Vs. Parikh Packaging Pvt. Ltd. CA (AT) (Ins) No. 695 of 2020

> NCLAT judgment dated 2020-12-23. Citation: TCN-2020-NCLAT-00005. The Operational Creditor, M/s. Sumilon Polyester Private Limited, filed an appeal under…

- **Court:** NCLAT
- **Order date:** 23 Dec 2020
- **Citation:** TCN-2020-NCLAT-00005
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/sumilon-polyester-pvt-ltd-vs-parikh-packaging-pvt-ltd-ca-92ee5f18

## Summary

### Background

The Operational Creditor, M/s. Sumilon Polyester Private Limited, filed an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, against the order dated 20.03.2020 passed by the National Company Law Tribunal, Ahmedabad Bench, which dismissed the application under Section 9 filed by the Operational Creditor. The dispute arose from the supply of CC PET and CC MET-PET materials by the Operational Creditor to the Corporate Debtor, M/s. Parikh Packaging Pvt. Ltd. In November 2017, the Corporate Debtor raised a dispute regarding the poor quality of the supplied material. The Operational Creditor claimed an amount of Rs. 19,07,560/- against the Corporate Debtor, which included outstanding payments for invoices and debit notes.

## Facts

M/s. Sumilon Polyester Pvt. Ltd. (Operational Creditor) supplied CC PET and CC MET-PET materials to M/s. Parikh Packaging Pvt. Ltd. (Corporate Debtor). In November 2017, the Corporate Debtor raised a dispute regarding the poor quality of the supplied material. The Operational Creditor filed a Section 9 application claiming Rs. 19,07,560/-. The claim included Rs. 11,83,255/- outstanding against invoice dated 04.09.2018, Rs. 5,96,234/- against debit note dated 28.02.2019, and Rs. 1,28,071/- against debit note dated 08.04.2019. The Corporate Debtor claimed substandard material was supplied, leading to rejection by their clients and debit notes. 9116.4 Kg of goods were returned. The Adjudicating Authority dismissed the Section 9 application due to a pre-existing dispute.

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## Issues and analysis

### Issue 1: Whether the Learned Adjudicating Authority was right in dismissing the Section 9 Application filed …

**Ratio:** The existence of a 'pre-existing dispute' bars the initiation of insolvency proceedings

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**Reasoning:** The Tribunal found sufficient evidence of a pre-existing dispute based on email

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**Interpretation:** The 'pre-existing dispute' must be a genuine dispute regarding the debt, not a

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**Application:** In this case, the Tribunal found that the Corporate Debtor had consistently

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## Parties

- **Judges:** Venugop…; Shreesha…; +1 more
- **Appellants:** M/s. Sumilon…
- **Respondents:** M/s. Parikh…
- **Advocates:** Malak B…; Rajat B…; +2 more

## Timeline

- **2017-11-01 — Dispute A…**: The Corporate Debtor raised a dispute regarding the poor quality of the material supplied…
- **2018-01-02 — Email Commun…**: Email from Operational Creditor acknowledging quality issues and agreeing to take back…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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