# In the matter of Prime Gold Sail JVC Limited (IB)-647(ND)2022

> NCLT judgment dated 2023-03-14. Citation: TCN-2023-NCLT-04252. Shubham Steel Industries, the operational creditor, filed a petition under Section 9 of the…

- **Court:** NCLT
- **Order date:** 14 Mar 2023
- **Citation:** TCN-2023-NCLT-04252
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/prime-gold-sail-jvc-limited-ib-647nd2022-e7caa91e

## Summary

### Background

Shubham Steel Industries, the operational creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Prime Gold Sail JVC Limited, the corporate debtor, for defaulting on payments for the supply of billets. The operational creditor claimed an outstanding amount of Rs. 1,07,38,363/- as of 13.04.2022, which included the principal amount and interest. The corporate debtor contested the petition, citing pre-existing disputes regarding the quality of the supplied billets and the failure of the operational creditor to supply the ordered goods at the agreed price. The corporate debtor had also initiated pre-institution mediation and filed a commercial suit against the

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## Facts

Shubham Steel Industries, acting as the operational creditor, supplied billets to Prime Gold Sail JVC Limited, the corporate debtor, starting in July 2021. The corporate debtor initially cleared the invoices but began defaulting on payments from September 2021. As of 13.04.2022, the outstanding amount was Rs. 1,07,38,363/-, including principal and interest calculated at 18% per month. The operational creditor issued a demand notice on 13.04.2022 under Section 8(1) of the IBC, 2016. The corporate debtor responded on 23.04.2022, claiming the billets were of deficient quality and that they had already initiated pre-institution mediation and filed a commercial suit against the operational creditor. The corporate debtor also argued that the operational creditor was using

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor/Respondent made a default in making the payment of the outstanding …

**Ratio:** The existence of a pre-existing dispute, as defined under Section 5(6) of the IBC, 2016,

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**Reasoning:** The court reasoned that the corporate debtor had raised a plausible contention regarding

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**Interpretation:** Section 5(6) of the IBC, 2016 defines 'dispute' to include a suit or

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**Application:** In this case, the corporate debtor raised a dispute regarding the quality of

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## Parties

- **Judges:** Sh. Ashok Kumar…; L. N. G…
- **Appellants:** Shubham Steel…
- **Respondents:** Prime Gold Sail…

## Timeline

- **2021-07-01 — Supply of B…**: The Petitioner supplied the first…
- **2021-09-01 — Default in P…**: The Respondent started defaulting in making payments against the invoices raised by the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8(1) — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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