Authority: National Company Law Tribunal, Jaipur Bench

Order Date: 17 June 2026

Case Overview

The Operational Creditor, Chowdhry Rubber & Chemical Private Limited, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor, Somi Conveyor Beltings Limited, seeking initiation of Corporate Insolvency Resolution Process (CIRP). The petition alleged a default of ₹1,05,46,719/- (Rupees One Crore Five Lakhs Forty-Six Thousand Seven Hundred and Nineteen only), comprising principal outstanding of ₹1,01,36,074/- along with interest calculated at 24% per annum amounting to ₹4,10,645/- accrued till 30 June 2025.

The debt arose from supply of goods/materials under various invoices dated between 21 January 2025 and 17 March 2025, pursuant to purchase orders issued by the Corporate Debtor during September 2024 to March 2025. The Operational Creditor issued a Demand Notice under Section 8 of the Code on 30 June 2025. The Corporate Debtor replied on 09 July 2025 disputing the claim, specifically regarding Invoice No.308/24-25/8236 dated 07 March 2025 amounting to ₹51,79,012/-.

The Corporate Debtor contended that the material supplied (SBR 1502-DC dry scrap/off-grade material) was substandard, technically unusable, and not in conformity with agreed specifications. They provided evidence of email communications starting from 18 March 2025 intimating the Operational Creditor about the defective material and requesting its lifting. They also relied on WhatsApp communications and an email dated 25 April 2025 where the Operational Creditor allegedly acknowledged the material as off-grade and suggested blending/reprocessing options.

Additionally, the Corporate Debtor claimed that out of the total amount, ₹49,52,861/- pertaining to six undisputed invoices was paid via NEFT on 07 July 2025 but was unilaterally refunded by the Operational Creditor on 08 July 2025 to artificially maintain the threshold under Section 4 of the Code.

Analysis and Finding

The Tribunal, after hearing both parties and examining the record, applied the principle established in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited (2018). It determined that the Adjudicating Authority's role under Section 9 is limited to ascertaining whether a genuine pre-existing dispute exists, without adjudicating on the merits.

The Tribunal found that the Corporate Debtor had raised objections regarding quality and usability of goods prior to the demand notice (from 18 March 2025 onwards). The communications indicated a commercial dispute regarding the nature and quality of goods supplied. The Tribunal noted that questions relating to quality, specifications, contractual obligations, and technical suitability require detailed evidence-based adjudication beyond the summary jurisdiction of Section 9.

The issue of payment and refund of ₹49,52,861/- further demonstrated contentious questions about the quantum of undisputed debt. While non-filing of NeSL/Information Utility record was noted, the Tribunal did not reject the petition on this ground alone due to settled legal position allowing other documentary evidence.

The Tribunal concluded that the dispute was not sham, illusory, or moonshine but genuine and pre-existing, raised much prior to the demand notice.

Final Outcome

The petition (CP (IB)-75/9/JPR/2025) was dismissed. The dismissal does not preclude the parties from pursuing other remedies available in law before appropriate forums. No costs were awarded.

Topics: Insolvency Petition, Goods Quality Dispute, IBC Section 9