# In the matter of EDAC Engineering Limited

> NCLT judgment dated 2023-08-08. Citation: TCN-2023-NCLT-02127. The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 8 Aug 2023
- **Citation:** TCN-2023-NCLT-02127
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/edac-engineering-limited-5de77ae2

## Summary

### Background

The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by Mr. Kannaia Pillai Selvam, Proprietor of M/s. Clarion Enterprises (Operational Creditor), against M/s. EDAC Engineering Limited (Corporate Debtor) for initiation of the Corporate Insolvency Resolution Process (CIRP). The Operational Creditor claimed that the Corporate Debtor defaulted on payments for the supply of various types of Electrodes. The Corporate Debtor disputed the claim, alleging delays in supply and raising disputes, while the Operational Creditor refuted these claims, stating that the Corporate Debtor had admitted its liability and that the defense was an afterthought.

## Facts

Mr. Kannaia Pillai Selvam, operating as M/s. Clarion Enterprises, supplied electrodes to M/s. EDAC Engineering Limited. The total invoices raised amounted to Rs. 2,96,32,900 between 2017 and 2021, against which only Rs. 11,12,536 was paid. The Operational Creditor claimed a default of Rs. 2,85,20,363 as principal and Rs. 2,64,73,237 as interest, totaling Rs. 5,49,93,600, with the date of default being 18.04.2021. The Corporate Debtor argued the petition was false, frivolous, and barred by limitation, alleging delays in supply and raising disputes. The Corporate Debtor also pointed to an arbitration clause in the purchase order. The Operational Creditor refuted these claims, stating that the Corporate Debtor had admitted its liability in meetings and emails and that the

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## Issues and analysis

### Issue 1: Whether the petition filed by the Operational Creditor is maintainable under Section 9 of the …

**Ratio:** Section 9 of the IBC allows an operational creditor to initiate CIRP against a corporate

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**Reasoning:** The court found that the Operational Creditor had supplied goods to the Corporate Debtor,

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**Interpretation:** Section 9 provides a mechanism for operational creditors to recover their dues

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**Application:** The court applied Section 9 to the facts of the case, finding that the

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## Parties

- **Judges:** SANJIV…; SAMEER…
- **Appellants:** Kannaia Pillai…
- **Respondents:** EDAC Engineering…

## Timeline

- **1987-06-26 — Incorporation of…**: EDAC Engineering Limited was incorporated with a Nominal Share Capital of…
- **2017-03-03 — First In…**: The Operational Creditor raised 187 invoices during the period from 03.03.2017 to…

## 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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