Absence of genuine dispute leads to CIRP against paper mill over ₹1.25 crore operational debt: NCLT admits insolvency plea under Sec. 9 IBC [Read Order]

The National Company Law Tribunal (NCLT), Chennai Special Bench‑II, has admitted an insolvency petition filed by the petitioner under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency ResolutionProcess (CIRP) over an operational debt of ₹1.25 crore.

The petitioner, Arjun Saikumar, engaged in coal trading and supplied “non‑cooking steaming coal” to the Coimbatore‑based paper mill pursuant to purchase orders. Despite receiving the goods, the company allegedly failed to clear dues of ₹89.78 lakh, prompting the creditor to issue a statutory demand notice under Section 8. With no payment or valid dispute raised, the petition was filed in November 2023.

Respondent, Danalakshmi Paper Mills Pvt Ltd contended that the claim was exaggerated and that disputes existed regarding coal quality and accounting adjustments, including TDS and Letter‑of‑Credit charges. The company also argued that the 24 per cent interest claimed was unilateral and not contractually agreed.

Rejecting these defences, the Bench comprising  Jyoti Kumar Tripathi  (Judicial Member)  and Venkataraman Subramaniam (Technical Member) observed that no contemporaneous evidence such as inspection reports or rejection notes was produced to show any quality dispute before the statutory notice. The Tribunal held that objections raised only after receipt of the demand notice were “afterthoughts” and not genuine disputes under the Code.

The order noted that the debtor had acknowledged liability and even explored settlement during proceedings, which further confirmed default. Citing the Supreme Court’s ruling in Mobilox Innovations v. Kirusa Software, the Bench reiterated that only real, pre‑existing disputes can bar admission under Section 9.

Finding the debt and default established, the Tribunal admitted the petition and appointed Krishnasamy Vasudevan as Interim Resolution Professional (IRP). The Board of Directors of Danalakshmi Paper Mills stands suspended, and a moratorium under Section 14 IBC has been imposed.

Accordingly, the petition was allowed

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