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NCLT Ahmedabad Dismisses Benzo Chem's Against Aether Industries Over Quality Dispute
The (NCLT) has dismissed an filed by against , holding that a over the quality of chemicals supplied barred the application under . The Bench, comprising Judicial Member Chitra Hankare and Technical Member Dr. Velamur G Venkata Chalapathy, pronounced the order on .
A Supply Deal Turns Sour
Benzo Chem, an , supplied chemicals to Aether Industries under purchase orders dated July 20 and , with payment due within 90 days of delivery. The total outstanding amount was ₹6.70 crore. After receiving no payment, Benzo Chem issued a on , and subsequently filed the on , seeking to initiate against Aether Industries.
To establish the debt, Benzo Chem relied on purchase orders, invoices, transport receipts, ledger accounts, GST filings, and minutes of joint inspection meetings. The company claimed that Aether Industries had not raised any grievance at the time of delivery and that the dispute was raised belatedly, after the payment had fallen due.
The 's Defense: A Pre-Existing Quality Dispute
Aether Industries contested the petition on multiple grounds. It argued that the goods supplied were contaminated and contained foreign particles, and that it had rejected the consignment through contemporaneous emails dated December 7 and 9, 2024—well before the . The company also pointed to communications from Benzo Chem itself, dated December 9 and 10, 2024, acknowledging the presence of particles in the material.
Additionally, Aether Industries highlighted that the purchase order expressly provided for inspection and approval of goods, and that it had the right to reject defective goods. The company had also filed a commercial civil suit in Surat seeking damages exceeding ₹9 crore, though this was initiated after the .
Aether Industries further objected to the application on procedural grounds, including non-compliance with filing the record of default with the under Regulation 20(1A) of the (Information Utilities) Regulations, 2017.
Court Finds 'Certainly, There Was a '
The Tribunal examined the timeline of communications. It noted that Aether Industries had raised the quality issue via emails in December 2024, while Benzo Chem's was issued only in March 2025. The Bench observed that even though the civil suit was filed later, the email exchanges clearly demonstrated a dispute that existed before the notice.
Applying the principle laid down by the in , the NCLT held that a , even if not ultimately correct, is sufficient to defeat a . The court also referenced other decisions including and to reinforce the position.
The Bench noted:
"Thus, certainly, there was a
, whether correct or not, before the issuance of the notice."
Decision and Implications
The NCLT rejected the petition, declining to admit Aether Industries into CIRP. The dismissal underscores the importance of the "" defense under the IBC. The ruling reinforces that insolvency proceedings cannot be used as a when a —supported by —exists between the parties.
For operational creditors, the decision serves as a reminder to ensure that the debt is undisputed before initiating Section 9 proceedings. For corporate debtors, it provides clarity that raising a timely dispute with documented evidence can effectively block an .
