# In the matter of Rathi Industries Limited (IB)-601(PB)-2022

> NCLT judgment dated 2023-04-10. Citation: TCN-2023-NCLT-03880. M/s. Sarvottam Rolling Mills Private Limited filed a petition under Section 9 of the Insolvency…

- **Court:** NCLT
- **Order date:** 10 Apr 2023
- **Citation:** TCN-2023-NCLT-03880
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/rathi-industries-limited-ib-601pb-2022-5be5666f

## Summary

### Background

M/s. Sarvottam Rolling Mills Private Limited filed a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, against M/s. Rathi Industries Limited, alleging default in payment for TMT bars supplied. The petitioner claimed that despite supplying goods supported by invoices and e-way bills, 17 invoices remained unpaid. The corporate debtor raised a debit note for a larger amount, claiming losses due to the petitioner's failure to supply the committed quantity of goods due to a sharp rise in market prices. The Adjudicating Authority considered the matter, noting the corporate debtor's defense of a pre-existing dispute and the vagueness of the debit note.

## Facts

M/s. Sarvottam Rolling Mills Private Limited (Operational Creditor) supplied TMT bars to M/s. Rathi Industries Limited (Corporate Debtor) based on oral purchase orders. The supply occurred between January 2022 and May 15, 2022, supported by invoices and e-way bills. The Operational Creditor claimed that 17 invoices remained unpaid. Two payments were made by the Corporate Debtor on 04.06.2022 and 06.06.2022, each for Rs. 15,00,000/-. The Operational Creditor issued a demand notice on 10.06.2022, claiming Rs. 1,73,30,765/- as outstanding, including interest at 18% per annum. The Corporate Debtor raised a debit note for Rs. 5,14,88,460/-, alleging losses due to the Operational Creditor's failure to supply the committed quantity of goods because of a sharp rise in market

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor is in default of payment of the outstanding operational debt owed to …

**Ratio:** Section 9(5) of the IBC prescribes the essential and mandatory requirements for admitting

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**Reasoning:** The Adjudicating Authority found that the Corporate Debtor had failed to make payment for

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**Interpretation:** Section 9(5) of the IBC outlines the conditions that must be met for an

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**Application:** The Adjudicating Authority applied Section 9(5) of the IBC to the facts of the

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## Parties

- **Judges:** Ramalingam…; AVINASH K.…
- **Appellants:** M/s. Sarvottam…
- **Respondents:** M/s. Rathi…

## Timeline

- **2022-01-01 — Supply of T…**: Supply of TMT Bars from January 2022 to May 15, 2022, supported by invoices and e-way…
- **2022-06-04 — Payment by Corporate…**: Corporate Debtor made a payment of Rs.…

## 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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