Pre-existing plausible dispute on wage quantum, evidenced by prior labour proceedings, bars Section 9 admission even if raised post-demand notice.

J U D G M E N T

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

The present appeal, preferred under Section 61 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’ in short), arises from the order dated 12.09.2025 (hereinafter referred to as the ‘Impugned Order’) passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench, Court-IV) in C.P. (IB) No. 599/ND/2023. By the said Impugned Order, the Adjudicating Authority dismissed the Section 9 application of IBC filed by the Appellant-Rashtriya Mill Mazdoor Sangh seeking initiation of the Corporate Insolvency Resolution Process (‘CIRP’ in short) against the Respondent/Corporate Debtor-National Textile Corporation Ltd. Aggrieved by the impugned order, the Appellant has preferred the present appeal.

2. Coming to the salient facts of the case which are relevant to be noticed for consideration of the matter at hand, we find that Section 9 application has been filed by the Appellant-Rashtriya Mill Mazdoor Sangh, Bombay (‘RMMS’ in short), in its capacity as a registered trade union. The Appellant is the recognised representative union of the workmen employed in three mills of the Corporate Debtor- National Textile Corporation Limited (‘NTC’ in short), which has a total of 26 mills under its fold. The Corporate Debtor is a government company within the definition of “Corporate Person” under Section 3(7) of the IBC. Due to shutdown of operations, from 18.05.2020 the Corporate Debtor had reduced wages payable to workmen to 50% of the normal till resumption of operations, which arrangement was conditionally accepted by the workmen in expectation of reopening of mills. However, due to continued non-payment of full wages, Complaint No. 160 of 2020 was initiated by RMSS before the Industrial Court, Mumbai inter alia for unfair labour practices besides seeking directions for payment of full wages and resumption of operations. However, on being denied the initial interim relief sought in the matter, a Review Application was filed which led to a Writ Petition No. 252 of 2022 filed by RMSS before the Hon’ble Bombay High Court. However, the Bombay High Court did not decide the merits of interim relief issue and instead observed on 13.11.2025 that the Industrial Court may decide Complaint No. 160 of 2020 expeditiously. Against an accumulation of arrears towards wages, gratuity and other dues to falling Rs 66.88 Cr. which was payable by the Corporate Debtor to the workers against which only part payment of about Rs 20 Cr. had been received, the Appellant-Operational Creditor issued a Demand Notice under Section 8 of IBC on 31.07.2023 claiming Rs 44.96 Cr. as outstanding dues. The Section 8 Demand Notice was never replied to by the Corporate Debtor. Upon failure of Corporate Debtor to discharge its liability, a Section 9 application was filed on 25.08.2023 before the Adjudicating Authority seeking initiation of CIRP against the Corporate Debtor. Taking notice of partial payments having been made towards the outstanding debt and pre-existing dispute, the Section 9 application was dismissed by the Adjudicating Authority on 12.09.2025. Assailing the impugned order, the Appellant has come up in appeal.

3. Making submissions on behalf of the Appellant, Shri Krishnendu Datta, Ld. Sr. Counsel contended that the Adjudicating Authority committed a grave error in rejecting the application filed under Section 9 on the ground of existence of pre-existing dispute. It was submitted that the proceedings before the Industrial Court, Mumbai and the Hon’ble Bombay High Court pertained to issues of unfair labour prac