# In the matter of S K Dyeing and Finishing Mills Pvt. Ltd. Company Petition (IB) No. 2166-ND-2019

> NCLT judgment dated 2020-01-16. Citation: TCN-2020-NCLT-02314. The case pertains to a petition filed under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 16 Jan 2020
- **Citation:** TCN-2020-NCLT-02314
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/s-k-dyeing-and-finishing-mills-pvt-ltd-company-petition-ib-no-2166-nd-2019-ba936cc4

## Summary

### Background

The case pertains to a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by M/s Shanti Chemtrade Pvt. Ltd. (Operational Creditor) against M/s S.K. Dyeing and Finishing Mills Pvt. Ltd. (Corporate Debtor) for initiation of Corporate Insolvency Resolution Process (CIRP). The Operational Creditor claimed that the Corporate Debtor defaulted on payments for goods (chemicals) supplied in the regular course of business. The Corporate Debtor disputed the claim, citing quality issues and raising debit notes. The Adjudicating Authority examined the submissions and documents to determine if there was a pre-existing dispute and if a default had occurred.

## Facts

M/s Shanti Chemtrade Pvt. Ltd. (Operational Creditor) filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against M/s S.K. Dyeing and Finishing Mills Pvt. Ltd. (Corporate Debtor) for defaulting on payments for goods supplied. The Operational Creditor claimed a total amount due of Rs. 13,74,030/- with interest. A demand notice was sent to the Corporate Debtor on 2019-05-06. The Corporate Debtor replied to the demand notice, disputing the claim and citing quality issues with the goods supplied, supported by debit notes. The Corporate Debtor argued that these debit notes constituted a pre-existing dispute. The Operational Creditor argued that the Corporate Debtor had not raised these disputes prior to the demand notice. The Adjudicating Authority

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor had raised a pre-existing dispute regarding the quality of goods …

**Ratio:** A petition under Section 9 of the IBC can be rejected if there is a pre-existing dispute

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**Reasoning:** The Adjudicating Authority examined the Corporate Debtor's claim that debit notes

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**Interpretation:** The interpretation of 'pre-existing dispute' requires that the dispute must be

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**Application:** In this case, the Corporate Debtor's claim of a pre-existing dispute based on

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## Parties

- **Judges:** ABNI RANJAN KUMAR…; Saroj Ra…
- **Appellants:** M/s Shanti…
- **Respondents:** M/s S K Dyeing…

## Timeline

- **2019-05-06 — Demand Notice…**: The Operational Creditor delivered a…
- **2019-05-13 — Reply to Deman…**: The Corporate Debtor sent a reply to the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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