Searching Case Laws & Precedent on Legal Query.....!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Scanned Judgements…!
Pre-existing Dispute Recognition - Multiple sources confirm that approaching the MSME Facilitation Council before filing under Section 9 of the IBC generally indicates the existence of a pre-existing dispute. For example, ["iValue Advisors Pvt. Ltd. Vs Srinagar Banihal Expressway Ltd. - Supreme Court"] states that authorities, it showed pre-existing under the MSME Council are to be initiated and thus the Application under 9(3) of IBC, implying that prior proceedings or disputes with the MSME Facilitation Council are indicative of a pre-existing dispute.
Judicial Precedents on Dispute Status - Courts have consistently held that pendency of claims or proceedings before the MSME Facilitation Council constitutes a pre-existing dispute, which bars or influences the admissibility of Section 9 applications. ["2023 Supreme(Online)(NCLAT) 2827"] notes that there was no pre-existing dispute when invoices and dues were based on contractual documents, whereas ["2023 Supreme(Online)(NCLAT) 2336"] and ["INDNCLAT00000023520"] emphasize that if a dispute was already pending or initiated before the MSME Council, the Section 9 application should be rejected under Section 9(5)(ii)(d).
Dispute as a Bar to Section 9 Filing - Several sources clarify that if a bona fide dispute exists, especially one initiated or pending before the MSME Facilitation Council, the application under Section 9 of IBC must be rejected. ["2023 Supreme(Online)(NCLT) 1967"] states that if there is a pre-existing dispute the NCLT is required to reject the application, and ["2023 Supreme(Online)(NCLT) 1966"] confirms that Section 9(5)(ii)(d) of the IBC, 2016 bars an application if there exists a genuine pre-existing dispute.
Distinction Between MSME Proceedings and IBC - Courts have distinguished proceedings before MSME Facilitation Councils from IBC processes, noting that initiation before the MSME Council does not automatically preclude IBC action unless a dispute is established. ["2023 Supreme(Online)(NCLT) 927"] emphasizes that since the debt and default exist and no pre-existing dispute has been brought to notice, it is a fit case for admission u/9 of IBC, whereas ["2024 Supreme(Online)(NCLT) 5120"] highlights that a pre-existing dispute was identified when the respondent approached the MSME Council, which affected the IBC application.
Impact of Prior Proceedings and Dispute Validity - Initiating proceedings before MSME Facilitation Councils or raising disputes there does not necessarily mean a dispute is genuine or pre-existing in the context of IBC. ["2023 Supreme(Online)(NCLAT) 2827"] clarifies that dispute raised before MSME was that it had dues to recover and that the Respondent has not paid, which does not automatically equate to a pre-existing dispute under IBC unless it is bona fide and pending. Conversely, ["2025 Supreme(Online)(NCLT) 3255"] notes that claim of Operational Creditor before the MSME facilitation council is in consonance with the provisions of IBC, 2016, but the existence of a pre-existing dispute can still bar the application.
Conclusion - Approaching the MSME Facilitation Council prior to filing a Section 9 IBC application generally indicates the existence of a pre-existing dispute, which is a key bar under Section 9(5)(ii)(d). Courts and tribunals have consistently held that if a bona fide dispute is pending or initiated before the MSME Council, the Section 9 application must be rejected, emphasizing the importance of the dispute's bona fide nature and timing ["2023 Supreme(Online)(NCLAT) 2827"] ["2023 Supreme(Online)(NCLT) 1967"] ["2023 Supreme(Online)(NCLT) 1966"]. Proper analysis of whether a dispute is pre-existing hinges on whether proceedings before the MSME Council are initiated, pending, or bona fide, rather than mere formalities or prior claims.
In the complex interplay between the , and the , —often MSME suppliers—frequently face a strategic dilemma. Can they pursue insolvency under IBC Section 9 after invoking the MSME Facilitation Council? A critical question arises: Does approaching the MSME Facilitation Council before filing a Section 9 IBC application amount to a ?
This post explores the legal landscape, drawing from judicial precedents and statutory provisions. While this analysis provides general insights, it is not legal advice—consult a qualified professional for your specific situation.
Generally, approaching the MSME Facilitation Council under before filing a Section 9 application under the IBC constitutes a . The reference under Section 18 presupposes a dispute regarding the amount due, and any such dispute existing prior to the typically requires dismissal of the Section 9 application at the threshold. 2021 0 Supreme(SC) 299 2023 0 Supreme(Cal) 1162
This position stems from the statutory scheme where invoking MSME mechanisms acknowledges a payment dispute, aligning with IBC's on admission where plausible contentions exist. 2023 1 Supreme 10
The MSME Act offers a tailored recovery path for delayed payments to micro and small enterprises. states: Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under , make a reference to the . 2021 0 Supreme(SC) 299 This language ties the reference to an existing dispute over goods/services payments (). 2023 0 Supreme(Cal) 1162 2023 0 Supreme(Telangana) 22
The process initiates with under , escalating to if needed, applying provisions. 2021 0 Supreme(SC) 299 2025 0 Supreme(SC) 830
Piya Bajwa vs Micro and Small Enterprises Facilition Centre - Delhi (2021)
2021 0 Supreme(Del) 1917 Courts note this often follows failed payments or prior claims, as in cases where petitions led to years later. 2025 0 Supreme(SC) 670Under IBC, ' Section 9 applications falter if a dispute predates the Section 8 notice. The clarifies: Existence of ‘’ should entail dismissal of application filed under Section 9 IBC at threshold – It is enough that a dispute exists between parties – What is to be seen is whether there was a requiring investigation. 2023 1 Supreme 10 Correctness is evidentiary, not for to decide initially. 2023 1 Supreme 10
An MSME reference qualifies, signaling contention over via /. This adversarial step confirms the dispute's nature.
Piya Bajwa vs Micro and Small Enterprises Facilition Centre - Delhi (2021)
2021 0 Supreme(Del) 1917MSME overrides other laws, creating parallel tracks. 2021 0 Supreme(SC) 299 2025 0 Supreme(SC) 830 In one case, MSME claims () preceded IBC Section 7 (), establishing sequence-based disputes. 2025 0 Supreme(SC) 670
Other rulings nuance this: Pendency before the Council may not always preclude IBC if no exists, especially with unpaid debts. 2025 Supreme(Online)(NCLT) 4770 However, mean that there is a ... under the MSME Council are to be initiated and thus the Application under 9(3) of IBC.
has disagreed with claims of no dispute where MSEFC references under Section 18 were filed, noting the Respondent has also disputed its liability and raised the disputes... Section 18 pertains to reference of a dispute to MSEFC. 2023 Supreme(Online)(NCLT) 1680 2023 Supreme(Online)(NCLT) 1681
Contrastingly, claims before the Council align with IBC rights and do not inherently affect them. 2024 Supreme(Online)(NCLT) 157 Yet, where principal falls below thresholds or interest is unadjudicated, petitions fail due to disputes. 2025 Supreme(Online)(NCLT) 4770
While the general rule holds, consider these caveats:
In contexts, filings may signal disputes precluding IBC. 2021 0 Supreme(Cal) 240
Approaching the MSME Facilitation Council typically establishes a , shielding debtors from Section 9 IBC at admission. This prioritizes MSME's specialized forum, ensuring disputes are addressed there first. Strategic sequencing is vital—rushing to IBC risks rejection.
Stay informed on evolving / views, as seen in threshold dismissals for unadjudicated claims. 2025 Supreme(Online)(NCLT) 4770 2023 1 Supreme 10
This post synthesizes general principles from cited precedents. Laws and interpretations may vary; seek tailored legal counsel.
Piya Bajwa vs Micro and Small Enterprises Facilition Centre - Delhi (2021)
2021 0 Supreme(Del) 1917: process., 2025 Supreme(Online)(NCLT) 4770, etc.
mean that there is a pre-existing dispute. ... Authorities, it showed pre-existing under the MSME Council are to be initiated and thus the Application under 9(3) of IBC. ... Section 8 Notice, there was an existing dispute.
The Applicant relied on several judicial precedents to assert that pendency of a claim before the Facilitation Council does not preclude recourse to IBC, particularly where there is no pre-existing dispute and the debt remains unpaid. 6.5. ... Section 18 (3) of the MSMED Act is not a mandatory precondition for claiming operational debt in proceedings under Section 9 of the Code, especially when there is no pre-#HL....
In reply to the application filed by the Petitioner under Section 9 of IBC, the Respondent has also disputed its liability and raised the disputes. 16. We are not in agreement with the contention of the Petitioner that there is no pre-existing dispute. ... Facilitation Council (MSEFC) under Section 18 of MSMED Act, 2006. ... It is stated that Section 18 pertains to reference of a dispute to MSEFC ....
In reply to the application filed by the Petitioner under Section 9 of IBC, the Respondent has also disputed its liability and raised the disputes. 16. We are not in agreement with the contention of the Petitioner that there is no pre-existing dispute. ... Facilitation Council (MSEFC) under Section 18 of MSMED Act, 2006. ... It is stated that Section 18 pertains to reference of a dispute to MSEFC ....
referred to as ‘the Code’), observing as follows: As regards the contention that there are pre- existing disputes as to the debts claimed, admittedly, the Applicant prior to filing this application, had initiated proceedings before MSME Council seeking the same amount claimed as outstanding ... The next issue raised by the Learned Counsel is with respect to a ‘pre existing dispute’ between the Parties as there was a ‘Barter Transaction’ and when ....
Para 13: We do not find that there was any pre-existing dispute raised by Respondent and we hold that the Section 9 Application was wrongly rejected. ... Thus the context of the word “dispute” in Section 18 takes colour from Section 17 of MSME Act. It is different from context of Section 5(6) read with Section 8 of IBC. ... The Appellant had a relief open under the #HL_S....
Section 9 of the IBC 2016 proposing to commence CIRP against respondent Government Company does not find favour with us in view of the pre-existing dispute between the parties, and the Corporate Debtor undertaking Sovereign Functions and as such ... Facilitation Council (MSMEFC) dated 30.08.2022.
Moreover, claim of Operational Creditor before the MSME facilitation council is in consonance with the provisions of IBC, 2016 and in no way effect the special rights provided under IBC, 2016 to Operational Creditor. ... In this stage, we may refer to provisions of Sections 17 and 18(1) of the Micro, Small, and Medium Enterprises Development Act, 2006 (“MSME”), As per section 18 of MSME parties to the dispute may make a reference t....
3.6 The Corporate Debtor states that there is a pre-existing dispute pending for adjudication. I say that as envisaged in Section 9(5) (ii) (d) of the IBC in case if there is a pre-existing dispute the NCLT is required to reject the application. ... 5.8 In view of the above, we find that the present case is fit for dismissal under Section 9(5)(ii)(d) read with Section 8(2)(a) o....
3.6 The Corporate Debtor states that there is a pre-existing dispute pending for adjudication. I say that as envisaged in Section 9(5) (ii) (d) of the IBC in case if there is a pre-existing dispute the NCLT is required to reject the application. ... 5.8 In view of the above, we find that the present case is fit for dismissal under Section 9(5)(ii)(d) read with Section 8(2)(a) o....
00. Thus, the total disputed amount was Rs. 1,59,09,214. 33. Buyer (appellant) did not make any payment so the entire amount was claimed as outstanding and due. Initially conciliation proceedings were initiated by the Facilitation Council but the buyer unit was not present though it had filed written submissions stating that on the request of the supplier it had appointed an arbitrator whereafter arbitration proceedings had commenced. As an independent arbitration agreement existed between the parties, Facilitation Council should not proceed under Section 18(3) of the MSME Act. Alr....
[In short “NCLAT”] apparently on the ground that section 9 of IBC petition was not maintainable as there was a pre-existing dispute. The NCLAT while allowing the withdrawal of the appeal granted stay of formation of CoC.
Whether the Facilitation Council itself could take up the dispute for arbitration and act as an arbitrator, when the Facilitation Council had conducted the conciliation proceedings under sub-section (2) of Section 18 of the MSME Act in view of the bar contained in Section 80 of the 1996 Act? Act makes it abundantly clear that provisions of Sections 15 to 23 of the MSME 26. That apart, from a reading of Section 18 of the MSME Act, more particularly sub-sections (2) and (3) thereof, the Facilitation Council is mandated either to itself conduct conciliation and on it....
Counsel reiterates that the respondent Award-holder could not have lodged its claim before the NCLT by reason of the impugned Award being stayed upon filing of the Section 34 application. On the factual aspect, counsel submits that the petitioner continues to exist and is hence under an obligation to pay the dues of the respondent Award-holder. Counsel submits that with the filing of an application under Section 34 is filed, the dispute raised by the party amounts to a pre-existing dispute which takes the respondent/Award-holder outside the purview of the IBC; Mobilox Innovations P....
Section 18 of the MSME Act provides that any party to a dispute may make a reference to the Facilitation Council, on receipt of which the Council shall either itself or through an alternate dispute resolution institution or centre, carry out conciliation between the parties and the provisions of Sections 65 to 81 of the Arbitration Act will apply to the said conciliation. If plaintiff has any ground to restrain the proceedings before the Facilitation Council or the Arbitral Tribunal, the same would have to be raised only before the Facilitation Council or the Arbitral Tribu....
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