Order passed by NCLT u/s 9 didn’t need interference as CD had not disputed any existence of debt: NCLAT

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  • Last Updated on 7 November, 2022

existence of debt

Case Details: Arun Mittal v. Sun Control Systems - [2022] 144 taxmann.com 18 (NCLAT-New Delhi)

Judiciary and Counsel Details

    • Justice Ashok Bhushan, Chairperson, M. Satyanarayana Murthy, Judicial Member
      & Barun Mitra, Technical Member
    • Abhijeet SinhaKunal Godhwani, Advs. for the Appellant.
    • Bhuvan AroraRamesh GuptaAakash BhardwajSanjay PalRishi SoodParv GargPawas KulshreshthaPiyush Hans, Advs. & Harsh Pratap Shahi for the Respondent.

Facts of the Case

In the instant case, the corporate debtor issued a work order to the operational creditor to supply and install the UPVC Profile of doors and windows. The operational creditor raised invoices. The corporate debtor defaulted in making payment of the debt due.

Thereafter, the operational creditor issued a demand notice claiming operational debt and filed an application u/s 9 of IBC to initiate the CIRP in respect of the corporate debtor. However, the said application was admitted by the Adjudicating Authority (NCLT).

The National Company Law Tribunal (NCLT) came to the conclusion that there was a clear indication of an operational debt due from the corporate debtor. Also, the corporate debtor defaulted in making payment of the debt due and further in the absence of any pre-existing dispute relating to the said debt, the NCLT admitted the section 9 application filed by the operational creditor and ordered initiation of the CIRP.

Aggrieved by the order of the NCLT, the corporate debtor preferred an instant appeal to the National Company Law Appellate Tribunal (NCLAT) praying for termination of the CIRP process initiated against the corporate debtor on the ground that there were defects in work executed and that 50 per cent work was not completed.


The NCLAT observed that there was no exchange of correspondence raising any dispute prior to the issue of the demand notice. Further, there was nothing credible to substantiate the pre-existence of the dispute.

The NCLAT held that the corporate debtor had defaulted in payment of the operational debt of an amount exceeding Rs. 1 lakh, i.e., Rs. 2,26,258, which amount had clearly become due and payable.

Further, the NCLAT held that in the absence of any pre-existing dispute, no error had been committed by the Adjudicating Authority (NCLT) in admitting the application u/s 9 of the IBC and initiating the CIRP. Therefore, the impugned order passed by the NCLT in admitting the application u/s 9 of the IBC didn’t require any interference.

Accordingly, the appeal was to be dismissed.

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