NCLT Ahmedabad Dismisses Ricova International's Insolvency Plea Against Kraft Paper Manufacturer

The Ahmedabad bench of the National Company Law Tribunal (NCLT) has dismissed an insolvency petition filed by Panama-based Ricova International INC against Shree Narayan Kraft Paper Mill LLP.

The bench comprising Judicial Member Shammi Khan and Technical Member Sanjeev Sharma found that there was pre-existing dispute between the parties. 

Ricova had claimed an operational debt of Rs 3,81,87,186.24 (USD 4,44,192.34) for the alleged supply of waste paper (NDLKC) pursuant to various indents placed between October 2024 and January 2025. The claimed date of default was April 13, 2025.

According to Ricova, it had agreed to change the payment terms from Documents Against Payment (DP) to Documents Against Acceptance (DA) at the Corporate Debtor's request following a fire at its factory.

Ricova alleged that the Corporate Debtor later refused to accept several consignments and instructed it to divert the shipments to third parties.

Ricova also claimed detention charges, demurrage, ground rent and other shipping costs, along with losses from reselling some consignments. A demand notice under Section 8 was issued on December 6, 2025, but payment was not made within the prescribed period.

The Corporate Debtor disputed the claim, relying on emails concerning Indent No. RF/24-25/049. It pointed to a February 5 email proposing to reduce the price from USD 325 per metric tonne to USD 315 per metric tonne, followed by a February 6 email cancelling the indent. It also relied on communications after the factory fire seeking diversion of consignments and No Objection Certificates issued on April 4, 2025.

The tribunal examined the correspondence exchanged before the demand notice, including emails dated February 5, February 6, March 31 and April 4, along with the NOCs. It noted that the documents showed disputes over the contractual terms, cancellation, diversion of consignments and liability for detention, demurrage and resale losses.

The tribunal further held that deciding whether the transactions resulted in concluded contracts, whether Ricova was entitled to recover the amount and whether the claim represented consideration for goods or damages would require adjudication before a competent forum. Such questions could not be decided in Section 9 proceedings.

Relying on the Supreme Court's ruling in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, the tribunal rejected the petition under Section 9(5)(ii)(d) after finding a pre-existing dispute. The petition was accordingly dismissed, with no order as to costs.