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December 2022

Corporate Law Corner Part B: Insolvency and Bankruptcy Law

By Pramod Prabhudesai | Vinod Agrawal, Chartered Accountants
Kaushik M. Jhaveri, Company Secretary
Reading Time 8 mins
7. Rajratan Babulal Agarwal vs. Solartex India Pvt. Ltd. & Ors.
Supreme Court of India Civil Appellate Jurisdiction
Civil Appeal No. 2199 of 2021

The standard i.e., the reference to which a case of a pre-existing dispute under IBC must be employed, cannot be equated with even the principle of preponderance of probability.

FACTS

The Operational Creditor (“OC”) and Corporate Debtor (“CD”) entered into an agreement for supply of 500 MT of Indonesian coal. The purchase order was dated 27th October, 2016 and the OC supplied 412 MT of coal between 28th October, 2016 to 2nd November, 2016. The CD sent a demand notice on 3rd February, 2018 to the OC for debt due of Rs. 21,57,700 against which the CD sent a reply notice holding the OC liable for an amount of Rs. 4,44,17,608 for its losses.

The OC filed a Section 9 application against the CD in the National Company Law Tribunal, Ahmedabad Bench (“NCLT”). Before NCLT, the OC stated that the CD’s reply notice has been done to create a spurious dispute that was not in existence before receiving of the notice, and that the claim raised by the CD concerns an associate company of the OC, and not the OC itself. The CD submitted that Section 9 petition should be rejected since there existed a pre-existing dispute in response to the demand notice dated 13th April, 2018. The CD stated that civil suits are pending tha
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