# In the matter of KRN Alloys Private Limited CP (IB) 430-NCLT-AHM-2019

> NCLT judgment dated 2022-06-01. Citation: TCN-2022-NCLT-02507. Shrimali Alloys, through its proprietor Mr. Dinesh Vyas, filed an application under Section 9…

- **Court:** NCLT
- **Order date:** 1 Jun 2022
- **Citation:** TCN-2022-NCLT-02507
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/krn-alloys-private-limited-cp-ib-430-nclt-ahm-2019-61e80b2d

## Summary

### Background

Shrimali Alloys, through its proprietor Mr. Dinesh Vyas, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against KRN Alloys Private Limited, the Corporate Debtor. The applicant claimed that the corporate debtor owed them an operational debt. The corporate debtor contested the application, arguing that there was a pre-existing dispute regarding the quality of the supplied MS scrap and the amount payable.

## Facts

Shrimali Alloys, a proprietorship firm, supplied MS Scrap to KRN Alloys Private Limited, a company limited by shares engaged in the manufacture of MS Billets. The applicant claimed that the corporate debtor owed them Rs. 3,31,30,538/- as of 04.03.2019, along with interest. The corporate debtor contended that the applicant had supplied inferior quality scrap and raised invoices for higher quality products. The corporate debtor issued debit notes to the applicant for price differences and compensation of loss suffered due to poor quality. A representative from the applicant firm, Mr. Chandan Dave, visited the factory of the corporate debtor on 03.09.2018 and accepted all the debit notes. The corporate debtor also raised a dispute regarding the accounts prior to the

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## Issues and analysis

### Issue 1: Whether a pre-existing dispute existed between the operational creditor and the corporate debtor …

**Ratio:** The ratio is that if a genuine dispute exists between the operational creditor and the

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**Reasoning:** The NCLT reasoned that the corporate debtor had raised a dispute regarding the quality of

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**Interpretation:** The interpretation is that the existence of a pre-existing dispute is a valid

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**Application:** In this case, the NCLT applied the ratio and reasoning to the facts and

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## Parties

- **Judges:** DEEPTI M…; Ajai Das Me…
- **Appellants:** Shrimali…
- **Respondents:** KRN Alloys…

## Timeline

- **2019-03-04 — Statutory Dema…**: Statutory demand notice under Section 8 of the IB Code in Form 3 was issued by the…
- **2019-03-21 — Reply to Deman…**: The corporate debtor replied 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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