#IBC Section 9

The NCLAT has ruled that advance payments made under a consortium agreement for goods supply qualify as operational debt under Section 5(21) of the IBC, even when payment obligations are structured between consortium members rather than directly with a corporate debtor. This expands the scope of operational creditors in complex supply chains and clarifies that inter-se financial arrangements do not negate the existence of a debt arising from a transaction in the ordinary course of business.

NCLAT rules that a contractual obligation to pay minimum guaranteed royalty qualifies as operational debt under IBC Section 9, even in the absence of invoices, if the default is admitted and exceeds ₹1 lakh. This expands the scope of operational debt to include uninvoiced but contractually mandated payments, impacting creditors' rights in insolvency proceedings.

Calcutta High Court rules that the period spent pursuing an IBC Section 9 application dismissed due to a pre-existing dispute can be excluded under Section 14 of the Limitation Act when filing a subsequent civil suit. This holding clarifies the interplay between IBC jurisdictional bars and limitation periods, offering relief to creditors navigating procedural hurdles in debt recovery.

NCLAT reinforces that a pre-existing dispute under IBC Section 9 must be backed by concrete evidence-such as prior communications, quality complaints, or compensation offers-to block insolvency proceedings. Operational creditors cannot rely on spurious claims to circumvent CIRP initiation against corporate debtors.

NCLAT rules that labour proceedings disputing wage quantum, even if liability is partially admitted, qualify as a pre-existing dispute under IBC Section 9, preventing Corporate Insolvency Resolution Process initiation. This reinforces the bar on operational creditors using CIRP to bypass ongoing labour adjudication, impacting trade unions and government-owned corporate debtors.

NCLAT rules that unverified WhatsApp screenshots and unfiled lab reports cannot establish a pre-existing dispute under Section 9 of the Insolvency and Bankruptcy Code. The ruling clarifies that operational creditors must provide credible, documented evidence to defeat insolvency petitions, impacting debt recovery strategies for businesses.