# In the matter of Palak Paper Mill LLP CP(IB)-14-2022

> NCLT judgment dated 2023-05-17. Citation: TCN-2023-NCLT-03306. Cima Paper S.P.A., an operational creditor, filed an application under Section 9 of the…

- **Court:** NCLT
- **Order date:** 17 May 2023
- **Citation:** TCN-2023-NCLT-03306
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/palak-paper-mill-llp-cpib-14-2022-fd3c8d54

## Summary

### Background

Cima Paper S.P.A., an operational creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against Palak Paper Mill LLP, the corporate debtor, for an outstanding amount of Rs. 1,05,54,638.61, which included interest. The applicant claimed to have supplied wastepaper to the respondent based on purchase orders placed by the respondent. The corporate debtor denied the allegations, claiming pre-existing issues, discrepancies in demand notices, and fabrication of documents. The corporate debtor also argued that the application was barred by limitation and that the claim was below the threshold limit under Section 4 of the IBC.

## Facts

Cima Paper S.P.A. (Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against Palak Paper Mill LLP (Corporate Debtor) for an outstanding amount of Rs. 1,05,54,638.61, including interest. Cima Paper claimed to have supplied wastepaper to Palak Paper Mill based on purchase orders. The total obligation of contribution is Rs. 6,00,00,000. Cima Paper issued demand notices on 31.12.2020, 02.01.2021, and 31.08.2021. Palak Paper Mill denied the allegations, claiming pre-existing issues, discrepancies in demand notices, and fabrication of documents. Palak Paper Mill argued that the application was barred by limitation and that the claim was below the threshold limit under Section 4 of the IBC. Palak Paper Mill claimed that the

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## Issues and analysis

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

**Ratio:** The existence of a pre-existing dispute, as defined under the IBC, bars the admission of

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**Reasoning:** The NCLT found that the corporate debtor had issued No Objection Certificates (NOCs) at

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**Interpretation:** The interpretation of 'dispute' under the IBC is broad and includes any

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**Application:** In this case, the NCLT applied the ratio of Mobilox Innovative Private Limited

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## Parties

- **Judges:** Deep Chandr…; Ajai Das Me…
- **Appellants:** Cima Pape…
- **Respondents:** Palak Paper Mill…

## Timeline

- **2016-01-01 — Insolvency and…**: The Insolvency and…
- **2017-10-12 — Incorporation of…**: Palak Paper Mill LLP was incorporated under the…

## 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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