# In the matter of A D Electro Steel Company Pvt. Ltd. C.P. (IB) No. 415-KB-2017

> NCLT judgment dated 2017-09-07. Citation: TCN-2017-NCLT-00452. Anil Steels, an operational creditor, filed a petition under Section 8 and 9 of the Insolvency…

- **Court:** NCLT
- **Order date:** 7 Sept 2017
- **Citation:** TCN-2017-NCLT-00452
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/a-d-electro-steel-company-pvt-ltd-cp-ib-no-415-kb-2017-6d4ea641

## Summary

### Background

Anil Steels, an operational creditor, filed a petition under Section 8 and 9 of the Insolvency and Bankruptcy Code, 2016, against A.D. Electro Steel Company Pvt. Ltd., the corporate debtor, for initiating the insolvency resolution process. The operational creditor claimed that the corporate debtor defaulted on payments for goods supplied as per purchase orders. The corporate debtor contested the petition, alleging that the goods supplied were not as per the specifications in the purchase orders and raised disputes regarding the quality and specifications of the supplied goods.

## Facts

Anil Steels, the operational creditor, supplied alloy steels, plain and high carbon steel, SGI, and graded casting to A.D. Electro Steel Company Pvt. Ltd., the corporate debtor, based on purchase orders dated 29.10.2015, 21.12.2015, and 25.02.2016. The total value of the supplied goods was Rs. 56,94,977.00. The corporate debtor made some payments totaling Rs. 19,44,782, including Rs. 4,44,782 on 15.01.2016, Rs. 10 lakhs on 22.02.2016, and Rs. 5 lakhs on 22.02.2016. A cheque for Rs. 20 lakhs issued by the corporate debtor on 10.05.2016 was dishonored with the endorsement "Exceeds Arrangements." Anil Steels served a legal notice dated 15.06.2016 under Section 138 of the Negotiable Instruments Act. The outstanding balance as of 03.06.2016 was Rs. 24,50,195. The

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## Issues and analysis

### Issue 1: Whether the dispute raised by the respondent/corporate debtor comes under the definition of section …

**Ratio:** Section 5(6) of the Insolvency and Bankruptcy Code, 2016 defines 'dispute' as a suit or

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**Reasoning:** The court reasoned that the corporate debtor's dispute regarding the quality of goods was

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**Interpretation:** The court interpreted that a dispute raised merely for the sake of objecting to

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**Application:** The court applied this interpretation to the facts, noting that the corporate

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## Parties

- **Judges:** Vijai Prata…; Jinan…
- **Appellants:** Anil St…
- **Respondents:** A.D.Electro Steel…

## Timeline

- **2015-10-29 — Purchase Ord…**: One of the purchase…
- **2015-12-21 — Purchase Ord…**: One of the purchase…

## 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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