2026 Supreme(Online)(NCLAT) 631

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Ashok Bhushan (Chairperson) , Mr. Barun Mitra (Member (Technical)) ,
Mr. Salil Musale – Appellant
Versus
LINTEC INDIA PRIVATE LIMITED – Respondent
870/ND/2026 COMPANY APPEAL(AT)(INS)

The judgment establishes that a Section 9 application must be rejected under Section 9(5)(ii)(d) when a notice of dispute is received or there is a record of dispute in an information utility.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 8, 9, and 9(5)(ii)(d) - Pre-existing dispute - Notice of dispute - Record of dispute in information utility - Admission of Section 9 application - Where notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility, the Adjudicating Authority shall reject the application - The court must determine if there is a plausible contention requiring further investigation, not a patently feeble legal argument - A dispute must be bona fide, not spurious, hypothetical, or illusory. (Paras 6, 11)

(B) Insolvency and Bankruptcy Code, 2016 - Section 9(5)(ii)(d) - Second demand notice - A second demand notice, with modified particulars, is to be treated as a fresh demand notice, and a civil suit filed prior to the issuance of the second demand notice qualifies as a pre-existing dispute. (Para 13)

Facts of the case:
The appellant, a suspended director of the corporate debtor, challenged an order admitting a Section 9 application filed by the operational creditor. The corporate debtor and operational creditor had a commercial relationship for supply of products. The operational creditor supplied goods and raised invoices. A dispute arose regarding payment. The corporate debtor sent a communication about a pre-existing dispute before the demand notice was issued. Upon receiving the demand notice under Section 8, the corporate debtor sent a reply disputing the claim and asserting a counterclaim of loss. The operational creditor then filed a Section 9 application. The corporate debtor also filed a commercial suit. The NeSL record of default was marked as 'disputed'. The Adjudicating Authority admitted the Section 9 application.

Findings of Court:
The Appellate Tribunal found that a pre-existing dispute existed. The notice of dispute issued by the corporate debtor and the record of dispute in the information utility (NeSL) triggered the mandatory rejection of the application under Section 9(5)(ii)(d). The Tribunal held that the Adjudicating Authority erred in ignoring these facts by labeling the dispute as spurious. The Tribunal relied on principles from the 'Mobilox Innovations' case regarding the existence of a bona fide dispute. It also applied its own precedent regarding second demand notices being treated as fresh notices, making a civil suit filed before the second notice a pre-existing dispute.

Issues: The main issues were whether a pre-existing dispute existed between the parties, and whether the Adjudicating Authority was bound to reject the Section 9 application given the notice of dispute and the record of dispute in the information utility.

Ratio Decidendi: The court ruled that Section 9(5)(ii)(d) of the IBC mandates rejection of a Section 9 application when a notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. The existence of a communication about a dispute prior to the demand notice, a detailed notice of dispute in reply to the demand notice, and a record of 'disputed' status in the information utility together established a pre-existing, bona fide dispute. The Adjudicating Authority cannot ignore such evidence by characterizing it as a spurious claim. Result : Appeal allowed. Impugned order set aside. Section 9 application rejected. Parties to bear their own costs.

Table of Content
1. background facts and procedural history of the appeal against cirp admission (Para 1 , 2)
2. contentions of appellant and respondent on maintainability of section 9 application (Para 3 , 4 , 5)
3. analysis of pre-existing dispute and statutory requirements under section 8 and 9 of ibc (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13)
4. holding that pre-existing dispute mandates rejection of section 9 petition (Para 14 , 15)

.J U D G M E N T

(25th May, 2026)

Ashok Bhushan, J.

1.This Appeal by a Suspended Director of the Corporate Debtor has been filed challenging the order dated 06.05.2026 passed by the Adjudicating Authority (National Company Law Tribunal) Mumbai Bench, Mumbai, Court VI in Company Petition (IB) No.669 of 2025 admitting Section 9 application filed by the Operational Creditor Respondent No.1 herein. Aggrieved by the order, this Appeal has been filed. On 12.05.2026, we have passed an interim order that IRP shall not take any steps in pursuance of the impugned order.

2. Brief facts of the case necessary to be noticed for deciding the Appeal are:-

2.1. The Corporate Debtor and the Operational Creditor had a long- standing commercial relationship. The Corporate Debtor issued multiple purchase orders to the Operational Creditor for supply of automobile-grade adhesive products for two-wheelers between February 2025 to April 2025. Operational Creditor supplied goods and raised invoices aggregating to Rs.9,74,86,143/-. The Operational Creditor sent an e-mail on 21.04.2025 alleging overdue payments. Corporate Debtor on 22.04.2025 released a payment of Rs.3,10,73,278/-. Operational Creditor instead of resuming supply, demanded a further sum of Rs.2,38,00,000/- before any supplies could be made. On 16.05.2025, the Operational Creditor responded with commercially unreasonable conditions for resuming supplies. On 19.06.2025, Corporate Debtor communicated to the Operational Creditor that there are pre-existing disputes between the parties. On 20.06.2025, the Operational Creditor issued a demand notice under Section 8 claiming an operational debt of Rs.9,74,86,143/-. On 30.06.2025, the Corporate Debtor sent reply to the demand notice disputing the claim and communicating the pre-existing dispute between the parties and breach of confidential information. The reply to demand notice also stated that the Corporate Debtor had suffered losses of Rs.35 Crores. On 02.07.2025, the Operational Creditor filed CP (IB) No.669 (MB) of 2025 under Section 9. On 11.07.2025, the Corporate Debtor filed a Commercial Suit No.91 of 2025 before the High Court of Bombay praying for a decree of Rs.25,42,78,096/-. The Adjudicating Authority issued notice to the Corporate Debtor and directed the Operational Creditor to file the NeSL record of default. On 24.07.2025, the Operational Creditor caused a communication to be issued through NeSL demanding amount of Rs.9,74,86,143/- within 10 days. The Corporate Debtor raised a dispute on the NeSL Information Utility portal in respect of the alleged debt. The authenticated status on the NeSL portal was marked as ‘disputed’. Corporate Debtor filed reply to Section 9 application. Operational Creditor filed rejoinder. Adjudicating Authority by the impugned order admitted Section 9 application.

3. We have heard Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant and Shri Arun Kathpalia, Learned Senior Counsel for the Respondent.

4. Learned Counsel for the Appellant challenging the order submits that before issuance of demand notice, e-mail dated 19.06.2025 was sent by the Corporate Debtor which clearly informed about the pre-existing dispute between the parties. Demand notice issued thereafter was replied by reply notice which was notice of dispute within the meaning of Sections 8 and 9. There being notice of dispute issued by Corporate Debtor, Section 9 application could not have been admitted. It is further submitted that in the NeSL record of information, the status was authenticated as disputed. Stat

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