# In the matter of Arjun Ispat India Ltd. (IB)-877 (ND)-2018

> NCLT judgment dated 2019-01-02. Citation: TCN-2019-NCLT-05337. The case involves an application by Leo Ispat Limited, an Operational Creditor, to initiate the…

- **Court:** NCLT
- **Order date:** 2 Jan 2019
- **Citation:** TCN-2019-NCLT-05337
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/arjun-ispat-india-ltd-ib-877-nd-2018-668177c6

## Summary

### Background

The case involves an application by Leo Ispat Limited, an Operational Creditor, to initiate the Corporate Insolvency Resolution Process (CIRP) against Arjun Ispat India Ltd., the Corporate Debtor, under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. The Operational Creditor claimed that the Corporate Debtor defaulted on payments for the supply of iron and steel goods. The Corporate Debtor resisted the application, arguing that the transactions were a sham and based on book entries without actual movement of material, and that the debt was related to a loan to an associate company.

## Facts

Leo Ispat Limited (Operational Creditor) supplied iron and steel goods to Arjun Ispat India Ltd. (Corporate Debtor), raising invoices totaling Rs. 1,17,04,192/-. The Corporate Debtor issued 13 post-dated cheques, all dated 2016-01-31, to discharge the outstanding liability. These cheques were dishonored with the remark "Exceeds Arrangement". The Corporate Debtor replaced these cheques on three occasions (2016-06-30, 2016-10-01, and 2017-01-01), but they were also dishonored. A notice under Section 8 of the IBC was issued but remained unreplied. The Operational Creditor then filed a petition under Section 9 of the IBC to initiate CIRP. The Corporate Debtor argued that it is a shareholder of Uttam Strips Ltd. (Associate Company) and that the transactions were

…

## Issues and analysis

### Issue 1: Whether the petition filed by the Operational Creditor for initiation of Corporate Insolvency …

**Ratio:** Section 9 of the IBC allows an operational creditor to initiate CIRP against a corporate

…

**Reasoning:** The court considered the documents on record, including invoices and dishonored cheques,

…

**Interpretation:** Section 9 provides a mechanism for operational creditors to recover their dues

…

**Application:** The court applied Section 9 to the facts of the case, finding that the

…

## Parties

- **Judges:** Ina Mal…; Deepa Kr…; +1 more
- **Appellants:** M/s. Leo Ispat…
- **Respondents:** M/s Arjun Ispat…

## Timeline

- **2016-01-31 — Cheque Is…**: Corporate Debtor issued 13 post-dated…
- **2016-06-30 — Cheque Replac…**: Corporate Debtor replaced…

## 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)

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/nclt-chandigarh/arjun-ispat-india-ltd-ib-877-nd-2018-668177c6