NCLT Ahmedabad Rejects Benzo Chem's Insolvency Plea Against Aether Industries Over Pre-Existing Dispute

On 8 September, the Ahmedabad Bench of the National Company Law Tribunal (NCLT) dismissed an insolvency petition filed by Benzo Chem Industries Pvt. Ltd. against Aether Industries Ltd. after finding a pre-existing dispute over the quality of chemicals supplied before the demand notice was issued.

A Bench comprising Judicial Member Chitra Hankare and Technical Member Dr. Velamur G Venkata Chalapathy observed:

“...it appears that the Corporate Debtor had raised the issue regarding defective material in the month of December 2024, while the notice was issued in March 2025. Thus, certainly, there was a pre-existing dispute, whether correct or not, before the issuance of the notice.”

Benzo Chem filed the application on 14 May 2025, claiming that Aether Industries had failed to make payments despite delivery of the goods and submission of invoices. The purchase orders provided for payment within 90 days of delivery. On 15 March 2025, Benzo Chem issued a demand notice, to which it claimed no reply was received.

To establish the operational debt, Benzo Chem relied on the purchase orders, invoices, transport receipts, ledger accounts, GST filings and minutes of meetings.

Aether Industries contested the maintainability of the petition and raised objections regarding non-compliance with the requirement to file the record of default with the Information Utility (NeSL) under Regulation 20(1A). It also disputed the manner in which GST records had been filed under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations.

Further, it contended that a bona fide dispute existed over the quality of the chemicals supplied. It alleged that the materials were contaminated and contained foreign particles, relying on contemporaneous emails dated 7 and 9 December 2024 rejecting the consignment. It also claimed that it had replied to the demand notice on 28 May 2025 and had filed a commercial suit in Surat seeking damages exceeding Rs. 9 crore.

The Tribunal examined the pleadings and correspondence and noted that Aether Industries had admitted delivery of the goods. However, emails exchanged in December 2024 showed that it had rejected the materials on account of contamination, several months before Benzo Chem issued the demand notice.

The Bench also noted that Benzo Chem's own communications acknowledged the presence of particles in the materials. It found that the dispute over the quality of the goods pre-dated the demand notice.

Accordingly, the NCLT rejected the insolvency petition.