# In the matter of Palav Synthetics Private Limited C.P. (I.B) No. 225-9-NCLT-AHM-2019

> NCLT judgment dated 2020-01-23. Citation: TCN-2020-NCLT-02210. The case involves an I.B. Petition filed by M/s. Balabux Synthetics Private Limited…

- **Court:** NCLT
- **Order date:** 23 Jan 2020
- **Citation:** TCN-2020-NCLT-02210
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/palav-synthetics-private-limited-cp-ib-no-225-9-nclt-ahm-2019-a2ae53ba

## Summary

### Background

The case involves an I.B. Petition filed by M/s. Balabux Synthetics Private Limited (Operational Creditor) under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against M/s. Palav Synthetics Pvt. Ltd. (Corporate Debtor). The Operational Creditor claimed that the Corporate Debtor defaulted on payments for synthetic yarn supplied for its fabric manufacturing business. The Corporate Debtor argued that the yarn supplied was not up to the mark, its quality and price were unilaterally changed in the invoices, and there was no agreement for interest payment.

## Facts

M/s. Balabux Synthetics Private Limited, the Operational Creditor, filed an I.B. Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against M/s. Palav Synthetics Pvt. Ltd., the Corporate Debtor. The Corporate Debtor approached the Operational Creditor for purchasing synthetic yarn for its fabric works. The Operational Creditor supplied the yarn as per purchase orders, and the Corporate Debtor received and utilized it. The Operational Creditor generated invoices for the supplies. The total bill amount was Rs. 12,32,203. The Corporate Debtor made partial payments totaling Rs. 3,95,538. Certain cheques issued by the Corporate Debtor were dishonored. The Operational Creditor issued a statutory demand notice for the outstanding amount of Rs. 14,61,592.93,

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted on …

**Ratio:** A default occurs when a debt is outstanding and the debtor fails to make payment when it

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**Reasoning:** The Corporate Debtor received and utilized the yarn supplied by the Operational Creditor

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**Interpretation:** The failure to make payment after receiving a demand notice constitutes a

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**Application:** The Corporate Debtor's failure to pay the outstanding amount for the yarn

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## Parties

- **Judges:** Harihar Prakash…
- **Appellants:** Balabux Synthetics…
- **Respondents:** Palav Synthetics…

## Timeline

- **1991-01-29 — Incorporation of…**: M/s. Palav Synthetics Private…
- **2017-06-14 — Last Payment…**: The last payment of Rs. 50,000 was…

## 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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