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.

ORDER

(Heard through VC)

This application has been filed 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 by M/s.Sri Amman Metal Works (hereinafter referred to as “Operational Creditor”) against M/s.Dindigul Steel Rolling Mills Private Limited (hereinafter referred to as “Corporate Debtor”) for initiating Corporate Insolvency Resolution Process (“CIRP”).

2. Part-I of the application sets out of the details of the Operational Creditor. It is stated that the Operational Creditor M/s. Sri Amman Metal Works, is a partnership firm with its office situated at Sivakasi, Tamil Nadu. Part-II of the application sets out the details of the Corporate Debtor as M/s.Dindigul Steel Rolling Mills P Ltd, a Private Limited company incorporated under the Companies Act, 1956 with CIN No. U02710TZ1995PTC006174 with the Registered Office at S.F.No 414/1 Karur Road, Kulathur Village, Vedasandur Taluk, Dindigul, Tamil Nadu. In Part-III of the application, the Operational Creditor has proposed the name of Mr.S.Kangayan, Regd No IBBI/IPA-002/IP-N00866/2019 2020/12770 as an Interim Resolution Professional .

3. Part-IV of the application details the total amount of debt as Rs.4,92,81,785/- (RupeesFour Crores Ninety Two Lakhs Eighty One Thousand Seven Hundred and Eighty Five only) along with interest @12% p.a. from the due date of invoices till the date of payment. It is stated that interest as on 14.12.2022 works out to Rs. 88,60,777/- Amount claimed to be in default is Rs.4,92,81.785/-. The Date of Default is shown as 14.12.2022.

4. Part-V of the application describes the particulars of the Operational Debt, documents, records and evidence of the default as below:

a) Copy of Invoices with e-way bills dated from 31.10.2018 to 09.02.2022.

b) Demand Notice under Form 3 of IBC (Application to Adjudicating Authorities) Rules 2016.

c) Copy of certified Form 5 A from the banks / financial institutions which maintain the accounts of Operational Creditor.

d) Copy of the ledger of the Corporate Debtor in the books of the Operational Creditor.

e) Copy of computation showing the details of the outstanding amount and date of default along with the calculation of interest.

f) Copy of the letter for outstanding reminders dated 28th Oct 2022 by Operational Creditor, mails as balance confirmation and short synopsis of realization outstanding from the Corporate Debtor dated 14th Dec 2022.

ARGUMENTS ON BEHALF OF APPLICANT

5. It is stated that the Operational Creditor is a service provider of metal works and other technical activities, whereas the Corporate Debtor is a company focussed on steel rolling mills, operating purely in melting iron ore delivered from various sources including the supply from Operational Creditor.

6. It is stated that the applicant supplied large amount of raw materials to the Corporate Debtor from time to time from 2018 to 2022 to the full satisfaction of the Corporate Debtor and there was no dispute at any time regarding the supply of materials.

7. It is stated that the Corporate Debtor failed to make the payment for the outstanding dues against the invoices from 31.10.2018 to 09.02.2022 for an amount of Rs. 4,92,81,785/- being the principal outstanding. It is stated that the Corporate Debtor is liable to pay interest of Rs. 88,60,777/- being interest @ 12% p.a.

8. It is stated that several reminders were mailed to the Corporate Debtor to clear the outstanding. A copy of the letter dated 28th October 2022 ‘Reminder for release of pending outstanding against outstanding’ and mails with subject matter ‘Confirmation of Balances from CD’ are enclosed wit