Civil Suit Post Section 9 Can’t Override Section 9 on Pre-Existing Dispute | NCLAT

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Pre-existing dispute under Section 9 IBC

Case Details: Yusuf Malubhaiwala vs. Anuj Maheshwari - [2025] 181 taxmann.com 453 (NCLAT-New Delhi)

Judiciary and Counsel Details

  • Justice Ashok Bhushan, Chairperson & Barun Mitra, Technical Member
  • Abhijeet Sinha, Vijayesh Atre, Ms Heena Kochar & Ms Aarya Chhangani, Advs. for the Appellant.
  • Ms Soumya Dharwa, Malak Bhatt, Rushabh Shah, Ms Neeha Nagpal, Ms Nitya Prabhakar, Advs. & Krishnendu Dutta, Sr. Adv. for the Respondent.

Facts of the Case

In the instant case, the operational creditor was a sole proprietorship concern of one ‘A’ who owns two concerns, namely ‘Haji’ and ‘Maaz’, under a common GST registration number. The operational Creditor had entered into a business transaction with the corporate debtor in the trading and supply of iron and steel materials.

The corporate Debtor had failed to clear the outstanding amount despite repeated requests, following which the operational creditor issued a Demand Notice under Section 8 of the IBC. As no payment was forthcoming, the operational creditor filed two separate applications under Section 9 of the IBC.

The NCLT vide the impugned order admitted the said application. The corporate debtor challenged the said order vide an instant appeal, contending that there was a serious pre-existing dispute. Thereafter, an appeal was made before the NCLAT.

It was noted that the police complaint alleging threats by the Operational Creditor, citing inconsistent amounts, was unrelated to the claimed debt and did not specifically dispute either the invoices or the supplies made.

Further, when a police complaint was not directly related to commercial dealings between the parties but was filed primarily as a safeguard against coercion, threats, intimidation, and illegal recovery, it could not be construed as a pre-existing dispute between the parties.

NCLAT Held

The NCLAT held that the civil suit was filed after the Section 9 application and did not qualify as a pre-existing dispute. Thus, disputes were not genuine, real or pre-existing, and therefore, the instant appeal against the NCLT’s impugned order was to be dismissed.

List of Cases Reviewed

  • NCLT’s Order dated 12.06.2025 in C.P. (IB) No. 29/9/MP/2020 (Para 32) affirmed
  • Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 (Para 23)
  • Neeta Saha v. Ram Niwas Gupta [2020] 117 taxmann.com 706/160 SCL 454 (NCLAT)/CA(AT)(Ins) No. 321 of 2021
  • Mateshwari Minerals v. Jet Granito Pvt. Ltd. [2021] 127 taxmann.com 795/166 SCL 207 (NCLAT)/CA(AT)(Ins) No. 776 of 2020 (Para 30) followed

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied