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

> NCLT judgment dated 2017-09-07. Citation: TCN-2017-NCLT-00451. 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-00451
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/a-d-electro-steel-company-pvt-ltd-cp-ib-no-415-kb-2017-9be0985c

## 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 claim, alleging that the goods supplied were not as per the specifications in the purchase orders and raised disputes regarding the quality of goods and the requirement for test certificates and guarantee certificates.

## 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 25.2.2016, valued at Rs. 56,94,977.00. Anil Steels issued invoices for these supplies. A.D. Electro Steel made initial payments totaling Rs. 4,44,782 against invoice no. M-50, followed by lumpsum payments of Rs. 10,00,000, Rs. 5,00,000, and Rs. 13,00,000. A cheque for Rs. 20,00,000 dated 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. A.D. Electro Steel failed to discharge the liability, leading Anil Steels to

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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:** A dispute must be bona fide and not raised merely for the sake of objecting to the

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**Reasoning:** The court reasoned that the corporate debtor accepted the goods without protest and

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**Interpretation:** Section 5(6) of the I&BC, 2016, defines a 'dispute' as a suit or

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**Application:** The court applied the ratio to the facts and found that the dispute raised by

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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 orders issued by A.D.…
- **2015-12-21 — Purchase Ord…**: One of the purchase orders issued by A.D.…

## 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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