# In the matter of SOUNDARARAJA MILLS LIMITED

> NCLT judgment dated 2025-11-04. Citation: TCN-2025-NCLT-01582. Nimbark Fashions Ltd, an operational creditor, filed a petition under Section 9 of the…

- **Court:** NCLT
- **Order date:** 4 Nov 2025
- **Citation:** TCN-2025-NCLT-01582
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/soundararaja-mills-limited-86c80229

## Summary

### Background

Nimbark Fashions Ltd, an operational creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Soundararaja Mills Ltd, the corporate debtor, due to unpaid operational debt.

## Facts

Nimbark Fashions Ltd supplied raw materials (fibre) to Soundararaja Mills Ltd for processing into yarn under a Buyback Agreement dated 01.07.2021.

The operational debt claimed by Nimbark Fashions Ltd is Rs. 5,34,55,340/- with the date of default as 16.04.2023.

Nimbark Fashions Ltd issued a demand notice under Section 8 of IBC to Soundararaja Mills Ltd on 13.01.2024.

Soundararaja Mills Ltd claimed that Nimbark Fashions Ltd owed them Rs. 8,40,84,840.87 for finished goods supplied.

Soundararaja Mills Ltd initiated arbitration proceedings after receiving the demand notice from Nimbark Fashions Ltd.

The Corporate Debtor admitted to a balance of Rs.4,76,73,667/- as on 31.03.2023.

Nimbark Fashions Ltd also provided a working capital of Rs.95,50,095/- to Soundararaja Mills Ltd.

…

## 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 dispute must be pre-existing, i.e., it must exist before the receipt

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**Reasoning:** The Adjudicating Authority relied on the Supreme Court's decision in Mobilox Innovations

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**Interpretation:** The term 'dispute' includes a suit or arbitration proceedings relating to the

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**Application:** The Adjudicating Authority found that the arbitration proceedings were

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## Parties

- **Judges:** SANJIV…; Venkataraman…
- **Appellants:** Nimbark Fashions…; Nimbark Fashions…
- **Respondents:** Soundararaja…
- **Other parties:** Nagalingam…
- **Advocates:** T.K. Bh…; Raj Jha…; +4 more

## Timeline

- **01.07.2021 — Buyback Agr…**: Nimbark Fashions Ltd and Soundararaja Mills…
- **31.03.2023 — First Invoi…**: The first invoice which came to be in default by the Corporate Debtor was the one raised…

## 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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