# In the matter of International Coil Limited No. (IB) -120 (PB)-2017

> NCLT judgment dated 2017-08-16. Citation: TCN-2017-NCLT-00614. Maxim Tubes Company Pvt. Ltd., acting as an Operational Creditor, filed a Company Application…

- **Court:** NCLT
- **Order date:** 16 Aug 2017
- **Citation:** TCN-2017-NCLT-00614
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/international-coil-limited-no-ib-120-pb-2017-f0717121

## Summary

### Background

Maxim Tubes Company Pvt. Ltd., acting as an Operational Creditor, filed a Company Application against its customer, International Coil Limited, the Corporate Debtor, under the Insolvency and Bankruptcy Code, 2016. The Operational Creditor claimed that the Corporate Debtor failed to open a Letter of Credit as agreed upon for two purchase orders of steel pipes. Despite partial payments, a balance of Rs. 81,53,763 remained unpaid. The Operational Creditor issued a Form-4 Invoice claiming a default of Rs. 91,96,269 including interest. The Corporate Debtor contended there was an existing dispute, citing delays by the Operational Creditor in approving the Letter of Credit format and non-supply of goods. They also claimed the cheques issued were for security purposes only and

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## Facts

Maxim Tubes Company Pvt. Ltd. (Operational Creditor) supplied steel pipes to International Coil Limited (Corporate Debtor) under two purchase orders dated 31.03.2016. The total amount due was Rs. 1,70,70,423. The agreement stipulated 100% payment against a 60-day Letter of Credit. The Corporate Debtor failed to open the Letter of Credit. Two post-dated cheques were issued for Rs. 68,94,223 and Rs. 1,01,07,853. The Operational Creditor demanded payment on 15.10.2016, and the Corporate Debtor acknowledged the delay. A Letter of Credit for Rs. 68,94,223 was given and encashed. An additional Rs. 20.00 lakhs was paid. A balance of Rs. 81,53,763 remained unpaid. The first cheque was dishonored due to 'payments stopped by drawer'. The second cheque was dishonored due to

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## Issues and analysis

### Issue 1: Whether a pre-existing dispute existed between the Operational Creditor and the Corporate Debtor …

**Ratio:** A 'dispute' under Section 5(6) of the IBC, 2016, includes suits or arbitration

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**Reasoning:** The NCLT found that the email communications from the Corporate Debtor acknowledged the

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**Interpretation:** The court interpreted the definition of 'dispute' narrowly, requiring a genuine

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**Application:** The court applied the ratio to the facts, noting that the Corporate Debtor's

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## Parties

- **Judges:** R. VARADH…; DeepaKr…
- **Appellants:** MAXIM TUBES…
- **Respondents:** International…

## Timeline

- **2016-03-31 — Purchase…**: Two purchase orders were placed by…
- **2016-10-15 — Demand for…**: Maxim Tubes Company Pvt. Ltd. demanded…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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