# In the matter of Planet Spinning Mills Private Limited

> NCLT judgment dated 2023-12-21. Citation: TCN-2023-NCLT-00075. The case involves a Company Petition filed by M/s Kunaal Cotton Corporation, the Operational…

- **Court:** NCLT
- **Order date:** 21 Dec 2023
- **Citation:** TCN-2023-NCLT-00075
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/planet-spinning-mills-private-limited-35a2a64c

## Summary

### Background

The case involves a Company Petition filed by M/s Kunaal Cotton Corporation, the Operational Creditor, on 2020-03-15, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Planet Springing Mills Pvt. Ltd., the Corporate Debtor, under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Operational Creditor claimed a default in payment of an operational debt amounting to Rs. 33,26,073/- (Principal Amount as on 2016-04-30 plus interest). The Corporate Debtor disputed the debt, alleging inferior quality of goods supplied and a pre-existing dispute.

## Facts

M/s Kunaal Cotton Corporation (Operational Creditor) filed a Company Petition against Planet Springing Mills Pvt. Ltd. (Corporate Debtor) on 2020-03-15, seeking to initiate CIRP due to a default in payment of Rs. 33,26,073/- for goods (cotton waste) supplied between 2016-03-01 and 2016-04-08. The Corporate Debtor issued five post-dated cheques totaling Rs. 16,30,467/- towards the first five invoices, but later issued letters raising concerns about the inferior quality of the goods. The Operational Creditor requested lab reports and return of goods, which were not provided. The Operational Creditor filed complaints under Section 138 of the Negotiable Instruments Act, 1881, due to dishonored cheques and issued a legal notice for winding up the Corporate Debtor. A demand

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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 legal principle is that the existence of a pre-existing dispute, meaning a dispute

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**Reasoning:** The NCLT reasoned that the Corporate Debtor had raised the issue of inferior quality of

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**Interpretation:** The interpretation is that a 'dispute' includes any assertion of facts or law

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**Application:** In this case, the NCLT applied the ratio to the facts by finding that the

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## Parties

- **Judges:** Reeta K…; Madhu S…
- **Appellants:** M/s Kunaal Cotton…
- **Respondents:** Planet Spinning…

## Timeline

- **2016-03-01 — Invoices…**: Operational Creditor sold, supplied and delivered bales of cotton waste to the Corporate…
- **2016-04-30 — Letters Regarding…**: Corporate Debtor issued letters dated 2016-04-30 & 2016-09-05 raising the issue of…

## 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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