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SANJAY KUMAR, R. MAHADEVAN
GLS Films Industries Private Limited – Appellant
Versus
Chemical Suppliers India Private Limited – Respondent
| Table of Content |
|---|
| 1. nature of insolvency proceedings and pre-existing disputes. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. court's observations on the credibility of disputes and parties' conduct. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 3. criteria for determining existence of pre-existing disputes. (Para 19 , 20 , 21) |
| 4. final ruling on the appeal. (Para 22) |
JUDGMENT :
SANJAY KUMAR, J.
1. Initiation of corporate insolvency resolution process was denied by the adjudicating authority but the appellate authority reversed that decision. Aggrieved thereby, the corporate debtor is in appeal. On 28.03.2025, this Court stayed the operation of the judgment under appeal.
2. Company Petition (IB)-792(ND) of 2021 was filed before the National Company Law Tribunal, New Delhi Bench (Court II) (hereinafter, ‘the NCLT’), by Chemical Suppliers India Private Limited, the respondent herein, under Section 9 of the Insolvency and Bankruptcy Code, 20161 [For short ‘the Code’] against GLS Films Industries Private Limited, the appellant.
3. The case of the respondent was that it had supplied chemicals to the appellant over a period of time and a sum of Rs.2,92,93,223/- was due and payable to it as on 2
The existence of a plausible pre-existing dispute negates an operational creditor's application for insolvency under Section 9 of the Code, necessitating dismissal of the claim.
Unsubstantiated claims of pre-existing disputes do not impede the admission of an application under Section 9 of the IBC.
The court emphasized that the existence of a pre-existing dispute regarding the operational debt negates the initiation of the Corporate Insolvency Resolution Process.
Genuine pre-existing dispute raised prior to Section 8 notice, alleging economic coercion in credit note issuance, justifies rejection of Section 9 application without merits examination.
The existence of a pre-existing dispute can nullify an application under Section 9 of the Insolvency and Bankruptcy Code, emphasizing that such disputes are mandatory for rejecting recovery claims.
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