# In the matter of Franco Leone Limited Company Petition No. IB- 307-ND-2019

> NCLT judgment dated 2022-05-09. Citation: TCN-2022-NCLT-02805. The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 9 May 2022
- **Citation:** TCN-2022-NCLT-02805
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/franco-leone-limited-company-petition-no-ib-307-nd-2019-ade2fe70

## Summary

### Background

The case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by M/S Merchens Karton-und Paper Fabric GMBH (Operational Creditor) to initiate Corporate Insolvency Resolution Process (CIRP) against M/S Franco Leone Limited (Corporate Debtor). The Operational Creditor claimed that the Corporate Debtor defaulted on a payment of Rs. 12,21,663.65 for supplying insole boards and shank boards. The Corporate Debtor contended that there was a pre-existing dispute regarding the quality of the supplied goods, and the demand notice was not validly issued.

## Facts

M/S Merchens Karton-und Paper Fabric GMBH (Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against M/S Franco Leone Limited (Corporate Debtor). The Operational Creditor claimed that the Corporate Debtor defaulted on a payment of Rs. 12,21,663.65 for supplying insole boards and shank boards. Invoice No. 423777 dated 02.02.2017 was issued to the Corporate Debtor for EUR 15058.10 (equivalent to Rs. 12,21,663.65). The Corporate Debtor argued that there was a pre-existing dispute regarding the quality of the supplied goods, and the demand notice was not validly issued. The Corporate Debtor claimed that the Operational Creditor was doing business in India

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## Issues and analysis

### Issue 1: Whether there was a pre-existing dispute between the …

**Ratio:** The existence of a genuine pre-existing dispute is a ground for rejecting an application

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**Reasoning:** The court found that there was direct communication between the Operational Creditor and

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**Interpretation:** The court interpreted the Supreme Court's judgment in Mobilox Innovations Pvt

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**Application:** The court applied the ratio to the facts of the case and found that there was

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## Parties

- **Judges:** DHARMINDER…; SUMITA PURK…; +1 more
- **Appellants:** M/S Merchens…
- **Respondents:** M/S Franco Leone…

## Timeline

- **2017-02-02 — Invoice I…**: Operational Creditor shipped material to the Corporate Debtor and issued Invoice…
- **2018-01-15 — Email Rem…**: Operational Creditor sent an e-mail dated 15.01.2018 for reminder of making the payment…

## 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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