# In the matter of India Steel Works Limited

> NCLT judgment dated 2024-05-08. Citation: TCN-2024-NCLT-01395. Stecol International Private Limited (Operational Creditor) filed a Company Petition under…

- **Court:** NCLT
- **Order date:** 8 May 2024
- **Citation:** TCN-2024-NCLT-01395
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/india-steel-works-limited-7927cf56

## Summary

### Background

Stecol International Private Limited (Operational Creditor) filed a Company Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against India Steel Works Limited (Corporate Debtor) for a total operational debt of Rs. 2,06,54,089/-, inclusive of outstanding claim of Rs. 1,64,47,874/- and interest of Rs. 42,06,215/-. The Operational Creditor is engaged in contract manufacturing of steel products and sought to procure stainless steel products from the Corporate Debtor. A Memorandum of Understanding (MOU) dated 10.12.2020 and a Sales Purchase Agreement (SPA) dated 16.01.2021 were executed between the parties. The Operational Creditor issued 53 purchase orders to the Corporate Debtor, who

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## Facts

Stecol International Private Limited (SIPL), the Operational Creditor, is in the business of contract manufacturing of steel products and wanted to procure stainless steel products. India Steel Works Limited (ISWL), the Corporate Debtor, engaged in steel manufacturing, expressed interest in manufacturing the required steel products. A Memorandum of Understanding (MOU) was signed on 2020-12-10, followed by a Sales Purchase Agreement (SPA) on 2021-01-16. SIPL issued 53 purchase orders to ISWL. SIPL paid advance amounts as per the SPA, but ISWL failed to complete the supply, resulting in outstanding dues. SIPL also paid charges on behalf of ISWL, which ISWL was obligated to reimburse. ISWL issued credit notes confirming this obligation. SIPL demanded payment of

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## Issues and analysis

### Issue 1: Whether the petition under Section 9 of the IBC should be admitted, considering the alleged …

**Ratio:** A pre-existing dispute must be a bona fide and genuine dispute, not a mere moonshine

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**Reasoning:** The Tribunal found that the Corporate Debtor's claim of a pre-existing dispute, based on

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**Interpretation:** The legal principle emphasizes that a pre-existing dispute must be genuine and

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**Application:** In this case, the Corporate Debtor's acknowledgement of debt through balance

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## Parties

- **Judges:** Madhu S…; Reeta K…
- **Appellants:** Stecol Internation…
- **Respondents:** India Steel Works…
- **Advocates:** Amir Ars…; Ragini…

## Timeline

- **2020-12-10 — MOU Sign…**: Memorandum of Understanding (MOU) was executed between Stecol International Private…
- **2021-01-16 — SPA Sign…**: Sales Purchase Agreement (SPA) was executed between Stecol International Private Limited…

## 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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