# In the matter of Sri Karthikeya Spinning and Weaving Mills Pvt. Ltd.

> NCLT judgment dated 2023-06-09. Citation: TCN-2023-NCLT-03021. M/s. Velavan Textiles, an operational creditor, filed an application under Section 9 of the…

- **Court:** NCLT
- **Order date:** 9 Jun 2023
- **Citation:** TCN-2023-NCLT-03021
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sri-karthikeya-spinning-and-weaving-mills-pvt-ltd-a3a8a030

## Summary

### Background

M/s. Velavan Textiles, an operational creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Sri Karthikeya Spinning and Weaving Mills Private Limited, the corporate debtor. The operational creditor supplied Polyester Staple Fiber (PSF) to the corporate debtor from 2014 to 2018. Disputes arose regarding the quality of the supplied PSF, with the corporate debtor alleging defects. The operational creditor claimed that payments were not made as per the agreed terms, leading to a default exceeding Rs. 1 Crore.

## Facts

M/s. Velavan Textiles (Operational Creditor) supplied Polyester Staple Fiber (PSF) to M/s. Sri Karthikeya Spinning and Weaving Mills Private Limited (Corporate Debtor) from 2014 to 2018. The terms included a 20-day credit period, with a 16% per annum interest on outstanding invoices. Payments were initially regular but later defaulted. The last supply was on 2018-11-20 for Rs. 6,24,621, and the last payment was on 2019-01-21, amounting to Rs. 3,34,366.40. The Corporate Debtor issued cheques for Rs. 49,50,000 each (total Rs. 1,48,00,000) on 2020-12-01, which were dishonored due to insufficient funds. The Operational Creditor sent legal notices on 2020-12-17. The Corporate Debtor claimed the PSF was of inferior quality, manufactured by Indorama Synthetics, leading to

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## Issues and analysis

### Issue 1: Whether the application filed by the Operational Creditor meets the requisites for initiating the …

**Ratio:** Section 9(5) of the IBC stipulates that the Adjudicating Authority shall admit the

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**Reasoning:** The NCLT found that the Operational Creditor's application was complete, the debt was not

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**Interpretation:** Section 9(5) sets the threshold for admitting an application for CIRP, focusing

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**Application:** The NCLT applied Section 9(5) to the facts, noting the complete application,

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## Parties

- **Judges:** SANJIV…; SAMEER…
- **Appellants:** M/s. Velavan…
- **Respondents:** M/s. Sri Karthikey…

## Timeline

- **2014-01-01 — Supply o…**: Operational Creditor started…
- **2018-11-20 — Last Sup…**: Operational Creditor made the last supply of…

## 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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