Case Note & Summary
The appeal arose from an order dated 17.10.2025 by the National Company Law Tribunal, Cuttack, which admitted an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by the Operational Creditor, M/s Sree UGCL Projects Limited, against the Corporate Debtor, M/s Geosphere Industries Pvt Ltd. The Corporate Debtor contended that there were pre-existing disputes regarding the quality of work performed by the Operational Creditor, which had led to penalties being proposed. The Corporate Debtor had issued several communications raising concerns about performance deficiencies and had proposed penalties amounting to Rs. 11.38 Cr. However, the Operational Creditor denied the existence of these penalties and claimed that the Corporate Debtor had acknowledged its debt in a ledger dated 03.03.2021. The Adjudicating Authority found that the Corporate Debtor's claims of pre-existing disputes were not supported by sufficient evidence, as they had continued to acknowledge the debt and issue completion certificates. The Tribunal emphasized that mere assertions of disputes without supporting evidence do not suffice to defeat a Section 9 application. The Corporate Debtor's reliance on a draft Memorandum of Understanding (MOU) and a disputed credit note was also deemed insufficient to establish a pre-existing dispute. Ultimately, the Tribunal upheld the admission of the Section 9 application, concluding that the Corporate Debtor had failed to demonstrate the existence of genuine disputes that would bar the proceedings under the IBC.
Headnote
A) Insolvency Law - Admission of Section 9 Application - Pre-existing Disputes - Insolvency and Bankruptcy Code, 2016, Section 9 - The Adjudicating Authority admitted the Section 9 application despite the Corporate Debtor claiming pre-existing disputes regarding performance deficiencies. The Tribunal found that the Corporate Debtor's letters did not constitute genuine disputes as they were not followed by contemporaneous actions such as debit notes or legal proceedings, thus upholding the admission of the application (Paras 18-24).
Issue of Consideration
Whether there existed pre-existing disputes that would bar the admission of the Section 9 application.
Final Decision
The Tribunal upheld the admission of the Section 9 application, finding that the Corporate Debtor failed to establish the existence of genuine pre-existing disputes that would bar the proceedings under the IBC.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Section 8
- Section 9
- operational debt
- pre-existing disputes
- corporate insolvency resolution process
