# In the matter of Proful Oils Pvt. Ltd. IB-1028(ND)-2020

> NCLT judgment dated 2021-04-01. Citation: TCN-2021-NCLT-02502. M/S Shree Jindal Soya, the operational creditor, filed a petition under Section 9 of the…

- **Court:** NCLT
- **Order date:** 1 Apr 2021
- **Citation:** TCN-2021-NCLT-02502
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/proful-oils-pvt-ltd-ib-1028nd-2020-beb4e7c6

## Summary

### Background

M/S Shree Jindal Soya, the operational creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/S Proful Oils Pvt. Ltd, the corporate debtor, for defaulting on a payment of Rs. 2,69,71,509/- towards goods supplied. The operational creditor claimed to have supplied goods under a High Seas Sale Agreement dated 2019-02-11, raising an invoice for Rs. 7,56,60,000/-, and despite receiving part payment, a significant amount remained outstanding. The corporate debtor contested the claim, alleging the goods were of inferior quality and unfit for consumption, and that a dispute existed, supported by an ongoing arbitration proceeding.

## Facts

M/S Shree Jindal Soya (Operational Creditor) filed a petition to initiate CIRP against M/S Proful Oils Pvt. Ltd (Corporate Debtor) under Section 9 of the IBC, 2016, for a default of Rs. 2,69,71,509/-. The Operational Creditor claimed to have supplied Crude Palm Oil to the Corporate Debtor under a High Seas Sale Agreement dated 2019-02-11, raising invoice No. 29/2018-19 for Rs. 7,56,60,000/-. The Corporate Debtor made a part payment of Rs. 5,45,33,392/- but failed to pay the remaining amount of Rs. 2,11,26,608/-. The Operational Creditor sent a demand notice on 2020-07-10. The Corporate Debtor replied on 2020-07-24, disputing the quality of the supplied oil, claiming it was inferior and unfit for consumption, and citing a counter claim of Rs. 50 Crores. An arbitrator

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## Issues and analysis

### Issue 1: Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, should be …

**Ratio:** Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016, mandates that the

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**Reasoning:** The court reasoned that the pendency of a Section 34 petition challenging the arbitral

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**Interpretation:** The term 'dispute' under the IBC is interpreted broadly to include any genuine

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**Application:** In this case, the court applied the ratio by considering the pending Section 34

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## Parties

- **Judges:** SHRI. P.S.N.…; V.K. SUB…
- **Appellants:** M/S Shree Jindal…
- **Respondents:** M/S Proful Oils…

## Timeline

- **2019-02-11 — High Seas Sale…**: High Seas Sale Agreement executed between the Operational Creditor and the Corporate…
- **2019-02-11 — Invoice…**: Invoice No. 29/2018-19 raised by the…

## 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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