# 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-00450. 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-00450
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/ad-electro-steel-company-pvt-ltd-cp-ib-no-415-kb-2017-9be14f09

## 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, an 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. Purchase orders were dated 29.10.2015, 21.12.2015, and 25.2.2016, valuing the supplies at 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 and Rs. 5 lakhs on 22.02.2016. A cheque for Rs. 20 lakhs issued by the corporate debtor was dishonored with the endorsement "Exceeds Arrangements". The operational creditor served a legal notice dated 15.06.2016 under Section 138 of the Negotiable Instruments Act. The corporate debtor failed to discharge the entire liability, leading the operational creditor to issue

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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 & Bankruptcy Code, 2016 defines 'dispute' as a suit or

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**Reasoning:** The court reasoned that the respondent's dispute regarding the quality of goods and the

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**Interpretation:** The court interpreted that the dispute raised by the respondent was not bona

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**Application:** The court applied the ratio to the facts of the case, noting that the

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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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