NCLAT Sets Aside Admission of Section 9 Application in Disputed Operational Debt Case Between OFB Tech Pvt. Ltd. and Maverick Developers
Principal Bench holds pre-existing dispute evident from Information Utility records and communications, directing rejection of insolvency petition filed by operational creditor.
In a significant ruling dated December 11, 2025, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, quashed the admission of a Section 9 application filed under the Insolvency and Bankruptcy Code, 2016 (IBC) by Maverick Developers and Colonisers Pvt. Ltd. ("Operational Creditor") against OFB Tech Private Limited ("Corporate Debtor"). The appeal was filed by Bhuvan Kumar Gupta, a suspended director of the Corporate Debtor, challenging the order dated July 31, 2025, whereby the Adjudicating Authority admitted the Section 9 application.
The dispute arose from transactions involving the supply and purchase of round HDPE pipes, sourced by OFB Tech from Giga Pipe Systems India LLP, and supplied to Maverick Developers. Maverick Developers claimed an operational debt of over Rs. 3 crore, alleging excess payment made by them to OFB Tech, which OFB Tech contested, stating no such debt was due and raising a pre-existing dispute based on accounting entries and contractual relationships.
Critical to the case was the existence of a "pre-existing dispute" under Section 9(5)(ii)(d) of the IBC, which mandates the rejection of a Section 9 application if a notice of dispute is received by the Operational Creditor or if there is a record of dispute in the Information Utility. The Operational Creditor had itself annexed the Record of Default (RoD) from the National E-Governance Services Limited (NeSL), which showed the status of default as "disputed" by the Corporate Debtor. The dispute related to ledger entries dated March 31, 2021, and August 31, 2021, involving Giga Pipe Systems, which the Operational Creditor denied having any transactions with.
The NCLAT, presided over by Justice Ashok Bhushan and Member (Technical) Barun Mitra, emphasized that Section 9 proceedings are summary in nature and not designed to adjudicate disputes. The Tribunal relied on the record of dispute in the Information Utility and the correspondence exchanged between the parties, particularly emails dated October 27 and 30, 2023, wherein the Operational Creditor disputed the accounting entries. These communications were held to constitute a clear notice of dispute.
The Tribunal referred to its precedent in Bhawani Prasad Mishra v. Armaco Infralinks Pvt. Ltd., where it was held that the existence of a dispute recorded in the Information Utility obligates the Adjudicating Authority to reject the Section 9 application. It also took note of the Supreme Court's judgment in Sabarmati Gas Ltd. v. Shah Alloys Ltd., which recognized that disputes raised after a significant lapse of time concerning ledger entries cannot be dismissed in Section 9 proceedings.
The Adjudicating Authority's failure to consider the record of dispute in the Information Utility and the notice of dispute from the Corporate Debtor was found to be a legal infirmity. The NCLAT observed that the Operational Creditor’s claim was intertwined with transactions involving Giga Pipe Systems and KK Spun India Ltd., entities with whom OFB Tech had ongoing disputes, further complicating the matter.
Consequently, the Tribunal set aside the order admitting the Section 9 petition, directing rejection of the insolvency application filed by Maverick Developers. The parties were directed to bear their own costs.
This ruling reinforces the principle that the existence of a bona fide dispute, especially when documented in the Information Utility, precludes the initiation of insolvency proceedings under Section 9 of the IBC. It underscores the necessity for operational creditors to establish undisputed debts before invoking the insolvency resolution process.
Bottom Line:
Existence of pre-existing dispute as recorded in the Information Utility mandates rejection of Section 9 application under IBC, 2016.
Statutory provisions:
Insolvency and Bankruptcy Code, 2016 - Section 9(5)(ii)(d); Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017.
Cases referred:
- Bhawani Prasad Mishra v. Armaco Infralinks Pvt. Ltd., Company Appeal (AT) (Insolvency) No.557 of 2025
- Rahee Jhajharia E to E JV v. MB Power (Madhya Pradesh Ltd.), Company Appeal (AT) (Ins.) No.2279 of 2024
- Sabarmati Gas Ltd. v. Shah Alloys Ltd., (2023) 3 SSC 229
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