# In the matter of Prism Surface Coatings Pvt. Ltd. C.P. (IB) No.341-BB-2019

> NCLT judgment dated 2020-02-12. Citation: TCN-2020-NCLT-01990. Abhiyanta Inc. filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 12 Feb 2020
- **Citation:** TCN-2020-NCLT-01990
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/prism-surface-coatings-pvt-ltd-cp-ib-no341-bb-2019-9e69a827

## Summary

### Background

Abhiyanta Inc. filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Prism Surface Coatings Private Limited, claiming default on four purchase orders/invoices. Prism Surface Coatings opposed the petition, alleging defective supply of goods and claiming damages for breach of contract. The petitioner claimed a total amount of Rs. 1,57,48,155, out of which Rs. 27,86,731 remained unpaid along with interest. The respondent contended that the petitioner's supplies were defective, leading to losses for the respondent, and that the petitioner had not rectified the defects despite being notified. The respondent also initiated arbitral proceedings for damages.

## Facts

Abhiyanta Inc. (Operational Creditor) filed CP (IB) No.341/BB/2019 under Section 9 of the Insolvency and Bankruptcy Code, 2016, against Prism Surface Coatings Private Limited (Corporate Debtor) for default in payment of Rs.27,86,731/- along with interest of Rs.3,34,407.72/-. The default arose from four purchase orders/invoices dated 22.01.2016, 10.11.2016, 10.11.2016, and 10.02.2017, totaling Rs.1,57,48,155/-. The Corporate Debtor contended that the goods supplied by the Operational Creditor were defective, leading to withholding of payments by their clients and subsequent losses. The Corporate Debtor also initiated arbitral proceedings against the Operational Creditor for breach of contract and damages amounting to Rs.78,00,000/-. The Operational Creditor claimed that

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## Issues and analysis

### Issue 1: Whether the instant Company Petition is false, frivolous and they are not liable to pay any sums of …

**Ratio:** The existence of a pre-existing dispute is a valid ground for rejecting a petition under

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**Reasoning:** The court found that the respondent had raised a substantial dispute regarding the

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**Interpretation:** The existence of a genuine and pre-existing dispute regarding the debt is a bar

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**Application:** In this case, the court found that the respondent had raised a substantial

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## Parties

- **Judges:** Rajeswara Rao…; Ashutosh C…
- **Appellants:** Abhiyanta…
- **Respondents:** Prism Surface…; Prism Surface…

## Timeline

- **2016-01-22 — Purchase…**: Purchase Order No.PSC-L/ATF/058/15-16 dated…
- **2016-11-10 — Purchase…**: Purchase Order No.PSC-L/JA-L/007/16-17 dated…

## 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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