Section 9 IBC Plea Dismissed as Invoice Dispute Showed Debt Was Not Crystallised | NCLAT

Case Details: Union Roadways Ltd. vs. ICE Steel 1 (P.) Ltd. - [2025] 179 taxmann.com 506 (NCLAT-New Delhi)

Judiciary and Counsel Details

• Justice Ashok Bhushan, Chairperson & Barun Mitra, Technical Member
• Pai Amit & Ms Bhavana Duhoon, Advs. for the Appellant.
• Arun Sri Kumar, Adv. for the Respondent.

Facts of the Case

In the instant case, the operational creditor was engaged in the business of providing transportation and trucking services to the corporate debtor. The operational creditor raised 247 invoices for the period from June 24, 2019, to February 24, 2020, for a total amount of Rs. 3.57 crore, against which only Rs. 10.08 lakh had been paid by the corporate debtor.

The operational creditor sent a Section 8 demand notice to the corporate debtor claiming Rs. 3.47 crore as the principal component of operational debt, along with Rs. 1.24 crore towards interest component, amounting to a total operational debt of Rs. 4.72 crore, including interest.

The corporate debtor failed to respond to the section 8 demand notice, following which the operational creditor filed a section 9 petition. The corporate Debtor filed a detailed reply denying liability and disputing the claimed outstanding and interest claim for want of agreement/debit notes.

The Adjudicating Authority (NCLT) dismissed the Section 9 application, noting disputes over the validity and accuracy of invoices, appropriation of payments, and the interest component, and observing that the claim amount was not crystallised and the proceeding could not be used as a recovery mechanism.

It was noted that there was a manifest dispute between the parties over invoices against which payments made by the Corporate Debtor were appropriated. Further, the mere mention of an interest claim in the invoice without any mutually acceptable agreement between the parties did not constitute a sufficient basis for including the interest component in the computation of outstanding operational debt, and that created a shadow of dispute in respect of operational debt.

NCLAT Held

The NCLAT observed that since there were clear differences between the parties on the crystallised amount of operational debt, the Adjudicating Authority had rightly drawn attention to the issue of the validity and accuracy of invoices, which had led to a situation of non-crystallisation of the claim amount, thereby raising the spectre of disputed debt.

The NCLAT held that since the defence raised by the Corporate Debtor in their reply filed in the Section 9 application was not illusory or moonshine, the Adjudicating Authority had not committed any error in dismissing the Section 9 application filed by the Operational Creditor.

List of Cases Reviewed

• Order of National Company Law Tribunal, Mumbai Bench-V in Company Petition (IB) No. 603/MB/2021 dated 04.09.2024 (para 22) affirmed
• Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [2017] 85 taxmann.com 292/144 SCL 37 (SC)/(2018) 1 SCC 353 (para 20) followed

List of Cases Referred to

• Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [2017] 85 taxmann.com 292/144 SCL 37 (SC) (para 3).