# In the matter of The Fertilizers and Chemicals Travancore Limited

> NCLT judgment dated 2023-08-09. Citation: TCN-2023-NCLT-02112. M/s. Prasad and Company (Project Works) Private Limited, the Operational Creditor (OC), filed…

- **Court:** NCLT
- **Order date:** 9 Aug 2023
- **Citation:** TCN-2023-NCLT-02112
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/the-fertilizers-and-chemicals-travancore-limited-6bd1af07

## Summary

### Background

M/s. Prasad and Company (Project Works) Private Limited, the Operational Creditor (OC), filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against The Fertilizers And Chemicals Travancore Ltd.(Fact Engineering and Design Organisation)(FEDO), the Corporate Debtor (CD). The OC claimed default in repayment of an operational debt amounting to ₹4,35,34,381/-. The CD disputed the claim, asserting a pre-existing dispute and raising a counter-claim for liquidated damages due to delays in project completion by the OC. The CD was engaged by NIT Nagaland for construction

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## Facts

1. M/s. Prasad and Company (Project Works) Private Limited (OC) filed an application under Section 9 of the IBC against The Fertilizers And Chemicals Travancore Ltd.(Fact Engineering and Design Organisation)(FEDO) (CD) for default in repayment of ₹4,35,34,381/-, an operational debt.
2. The OC was awarded a contract by the CD for construction of Academic Buildings and Library Block at NIT, Nagaland, with a contract value of Rs.95,43,27,845.52/-
3. The OC raised RA Bills No.24 and No.25, dated 28.02.2019 and 18.07.2019, respectively, which were pending for payment.
4. The CD stated that the OC failed to complete the works within the stipulated time, leading to delays.
5. The CD claimed that the OC is liable for compensation for delay, amounting to 10% of the contract value,

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## Issues and analysis

### Issue 1: Whether there is a pre-existing …

**Ratio:** The existence of a pre-existing dispute bars the initiation of CIRP under Section 9 of

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**Reasoning:** The NCLT found that communications between the OC and CD as early as 24.08.2020 indicated

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**Interpretation:** The court interpreted the communications and actions of the parties to

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**Application:** The NCLT applied the principle that a pre-existing dispute bars the initiation

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## Parties

- **Judges:** P. Moha…; Satya Ranjan…
- **Appellants:** M/s. Prasad and…
- **Respondents:** THE FERTILIZERS…

## Timeline

- **2014-09-12 — Letter of Inte…**: The petitioner was awarded with Annexure 1…
- **2014-09-16 — Work Ord…**: The petitioner was awarded with Annexure 2…

## 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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