2026 Supreme(Online)(NCLT) 2485

NATIONAL COMPANY LAW TRIBUNAL
NEW CHENNAI TOWNSHIP PRIVATE LIMITED – Appellant
Versus
ESWARI ELECTRICALS PRIVATE LIMITED – Respondent
C.P. (IB) - 147/2024

A petition under Section 9 of the IBC is not maintainable when a genuine pre-existing dispute exists, supported by documentary evidence. An application under Section 65 requires explicit proof of fraudulent or malicious intent.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 9 and 65 - Pre-existing dispute - Dismissal of petition for initiation of Corporate Insolvency Resolution Process (CIRP) - For a Section 9 petition to be maintainable, the operational debt must be undisputed - The existence of a dispute must be pre-existing i.e., it must exist before the receipt of the Demand Notice - The adjudicating authority is only to see whether there is a plausible contention requiring further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. (Paras 27, 28 and 35)

(B) Insolvency and Bankruptcy Code, 2016 - Section 65 - Fraudulent or malicious initiation of proceedings - To invoke Section 65, there must be substantial and corroborative evidence to explicitly prove fraudulent intent, malice, and mens rea on part of the petitioner by way of specific documentary evidence - The burden lies on the objecting party to place on record compelling and credible evidence that the petitioner has approached the Adjudicating Authority with mala fide intent or for purposes extraneous to the resolution process - A petition cannot be rejected solely on the ground of lack of intent for resolution unless there is explicit documentary proof of fraudulent or malicious intent. (Paras 30, 31, 32, 33 and 34)

Facts of the case:
The Operational Creditor filed a petition under Section 9 of the IBC claiming an unpaid operational debt of Rs.1,78,18,246/- arising out of two lease deeds and a subsequent MOU for lease and maintenance charges. The Corporate Debtor opposed the petition, alleging that no amount was due and that a pre-existing dispute existed, as evidenced by various communications, a MOU which cancelled the earlier lease, a cancellation deed confirming no dues, and an arbitration notice. The Corporate Debtor also filed an application under Section 65 of the IBC, seeking to penalize the Operational Creditor for filing the petition with malicious intent.

Findings of Court:
The Tribunal held that a pre-existing dispute existed between the parties prior to the issuance of the demand notice under Section 8, as evidenced by numerous letters, emails, the MOU, and the cancellation deed which clearly stated that the Corporate Debtor was not liable for any dues. The disputes were not moonshine or spurious. Consequently, the petition under Section 9 was not maintainable. Regarding the Section 65 application, the Tribunal found that the Corporate Debtor failed to produce any substantial or corroborative material to prove the allegation of fraud or malice on the part of the Operational Creditor, and thus, the application under Section 65 was also dismissed.

Issues: The main issues were whether there was a pre-existing dispute between the parties that would bar the maintainability of the Section 9 petition, and whether the petition was filed with fraudulent or malicious intent warranting penalties under Section 65 of the IBC.

Ratio Decidendi: The court ruled that the existence of a plausible and genuine pre-existing dispute, supported by documentary evidence, renders a Section 9 petition under the IBC non-maintainable. The bar of a pre-existing dispute as established in Mobilox Innovations Pvt. Ltd. was applied. For an action under Section 65, a higher threshold of proof, requiring explicit documentary evidence of fraudulent or malicious intent, is necessary. Result : Petition under Section 9 and the application under Section 65 are dismissed with no orders as to cost.

Table of Content
1. the petition is filed under section 9 for cirp due to alleged operational debt default. (Para 1 , 2 , 3 , 4 , 5)
2. the corporate debtor disputes the debt, alleging pre-existing disputes and counter-claims. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15)
3. the tribunal finds documentary evidence of pre-existing disputes, including letters and cancellation deeds. (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26)
4. a petition under ibc is not maintainable if a pre-existing dispute exists; the dispute must be genuine, not frivolous. (Para 27 , 28 , 30 , 31 , 32 , 33)
5. section 65 requires explicit proof of fraud/malice, not found here; both petition and application dismissed. (Para 34 , 35 , 36 , 37)

COMMON ORDER (Heard through Hybrid Mode)

1.This petition CP(IBC)/147(CHE)/2024 under Section 9 of the Insolvency and Bankruptcy Code, 2016 {“IBC”) r/w Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 has been filed by New Chennai Township Private Limited (hereinafter referred to as “Petitioner/Operational Creditor”) against Eswari Electricals Limited (hereinafter referred to as (“Respondent/Corporate Debtor”) for initiating Corporate Insolvency Resolution Process (“CIRP”).

An application IA(IBC)/1779(CHE)/2024 under Section 65 of the Insolvency and Bankruptcy Code, 2016 has been filed by Eswari Electricals Private Limited (Corporate Debtor) against New Chennai Township Private Limited (Operational Creditor) seeking directions to penalize and punish the Operational Creditor.

2. Part-I of the petition sets out the particulars of the Petitioner/Operational Creditor, New Chennai Township Private Limited. It has its Office at No.15/26, 2nd Main Road, Korrur Garden, Kotturpuram, Chennai-600 085. Part-II of the petition sets out the details of the Corporate Debtor, Eswari Electricals Private Limited. It was incorporated on 29.05.1992 with Nominal Share Capital of Rs.4,50,00,000 and Paid-up Share Capital of Rs.4,50,00,000. Its Registered Office is situated at Plot No.64, Industrial Estate, Perungudi, Chennai-600 096 within the jurisdiction of this Tribunal. In Part-III of the petition, the Petitioner has not proposed the name of any Interim Resolution Professional. Part-IV of the petition contains the particulars of operational debt i.e., Rs.1,78,18,246/- and date of default i.e., 31.12.2021. This petition has been filed on 29.05.2024. In Part-V of the petition, the Petitioner has enclosed copy of the Lease Deed dated 01.02.2012, 23.04.2013, MOU dated 09.11.2022 and details of invoices/payments.

3. The case of the Petitioner in brief is that the Petitioner is the owner of a property measuring 312 Acres situated at Paramankeni and Vellur villages of Cheyyur Taluk, Chengalpet District. It was notified as Special Economic Zone (SEZ) by the Central Government. The Petitioner developed the infrastructure facilities in the SEZ. It obtained approvals for its operations from the Government Authorities. The Corporate Debtor entered into a Lease Deed for a period of five years vide Lease Deed dated 01.02.2012 registered vide Document No. 456/2012. The premises was on a carpet area of 9965.42 square feet described in Item 2 & 3 of Schedule-B. At the request of the Lessee/Corporate Debtor, the Petitioner allotted additional building space for 99 years after executing a Lease Deed on 23.04.2013 for 1.989 Acres of land mentioned in Schedule-B of the registered Document No. 1509/2013.

4. A Memorandum of Understanding was entered into between the parties on 09.11.2022 vide which Lease Deed registered vide Document No. 1509/2013 was cancelled. A Sale Deed was executed and a new space of 1.989 Acres of land was allotted to the Corporate Debtor since the Petitioner required the space for its own construction works. It is stated that the Lessee/Corporate Debtor defaulted in making payment of the lease amount in respect of first lease deed dated 01.02.2012 and also the maintenance charges in re

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