# In the matter of Stanfab Apparels Pvt. Ltd. CP-578-IB-2018

> NCLT judgment dated 2018-10-10. Citation: TCN-2018-NCLT-00614. M/s Orchid Industries Private Limited filed a company petition against M/s. Stanfab Apparels…

- **Court:** NCLT
- **Order date:** 10 Oct 2018
- **Citation:** TCN-2018-NCLT-00614
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/stanfab-apparels-pvt-ltd-cp-578-ib-2018-9a554602

## Summary

### Background

M/s Orchid Industries Private Limited filed a company petition against M/s. Stanfab Apparels Private Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming a default of ₹1,04,21,456. The petitioner, an operational creditor, alleged that it supplied various kinds of laces to the corporate debtor between January 2014 and April 2016. The corporate debtor made payments until December 2015 but subsequently defaulted. The corporate debtor, however, raised a dispute regarding the quality of the lace supplied, citing rejections from its importer and raising concerns about untrimmed lace and poor quality.

## Facts

M/s Orchid Industries Private Limited (Operational Creditor) filed a petition against M/s. Stanfab Apparels Private Limited (Corporate Debtor) under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming a default of ₹1,04,21,456. The Operational Creditor supplied various kinds of laces to the Corporate Debtor from January 2014 to April 2016, and payments were made until December 2015. After December 2015, the Corporate Debtor allegedly defaulted on payments, leading the Operational Creditor to issue a Section 8 notice. The Corporate Debtor, however, raised a dispute regarding the quality of the lace, citing rejections from its importer. The Corporate Debtor claimed that the lace supplied was of inferior quality, leading to rejections and financial losses.

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## Issues and analysis

### Issue 1: Whether a pre-existing dispute regarding the quality of the lace existed between the operational …

**Ratio:** The adjudicating authority must reject an application under Section 9(5)(2)(d) of the IBC

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**Reasoning:** The court reasoned that the corporate debtor had communicated its concerns about the lace

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**Interpretation:** The existence of a genuine and pre-existing dispute, as evidenced by

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**Application:** In this case, the court found that the email correspondence and the rejection

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## Parties

- **Judges:** B.S.V. Prakash…; S. VIJAYARA…
- **Appellants:** M/s Orchid…
- **Respondents:** M/s.Stanfab…; M/s.Stanfab…

## Timeline

- **2014-01-01 — Supply of…**: M/s Orchid Industries Private Limited supplied various kinds of laces to M/s. Stanfab…
- **2016-04-01 — End of S…**: The supply of laces from M/s Orchid Industries Private Limited to M/s. Stanfab Apparels…

## 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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