Tribunal holds that operational creditor's claim under IBC not maintainable due to pending arbitration proceedings and disputes over invoices, inventory verification, and post-termination charges
In a recent significant ruling dated September 29, 2026, the National Company Law Tribunal (NCLT), Ahmedabad Bench, dismissed the Section 9 petition filed by M/s Movemate Logistics Private Limited seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s Oyo Hotels Private Limited. The petition related to an alleged unpaid operational debt exceeding Rs. 2.45 crore for warehousing, logistics, and rental services.
The tribunal's detailed judgment highlighted that the dispute between the parties was real, existing, and pre-dated the insolvency application, thus rendering the petition non-maintainable under the Insolvency and Bankruptcy Code, 2016 (IBC). The operational creditor had claimed dues from April 1, 2024, onwards under three interlinked agreements relating to vehicle rental, warehouse operations, and logistics services. However, Oyo Hotels contested the claim on multiple grounds, including discrepancies in inventory measurements, poor condition of stored goods, denial of inspection rights, and unresolved reconciliation of accounts.
A crucial aspect of the dispute was the termination of all agreements by mutual consent effective September 30, 2024. Despite this, Movemate Logistics continued raising invoices for storage and rental charges post-termination, which Oyo Hotels disputed. The corporate debtor also filed arbitration proceedings under Section 9 of the Arbitration and Conciliation Act, 1996, seeking protection and inspection rights for its goods stored in warehouses. The Delhi High Court had granted interim protection to Oyo Hotels, restraining the operational creditor from alienating the goods pending arbitration.
The NCLT bench, comprising Hon'ble Member (Judicial) Mrs. Chitra Hankare and Hon'ble Member (Technical) Dr. V. G. Venkata Chalapathy, emphasized that the insolvency process under IBC is not meant for recovery of disputed contractual claims such as damages, storage charges, or relocation costs. The tribunal reiterated that where a pre-existing dispute exists and is subject to arbitration, the CIRP mechanism cannot be invoked to bypass the arbitration process.
The tribunal noted that the operational creditor had not complied with mandatory procedural requirements under the IBC, including the absence of a NeSL Record of Default certificate, and had selectively withheld correspondence that raised disputes. The continuation of invoices post-termination and the unresolved disputes over inventory verification further substantiated the existence of a bona fide dispute.
Consequently, the NCLT rejected the petition, directing the parties to pursue their remedies through arbitration and not through insolvency proceedings. This ruling aligns with precedents such as the Supreme Court's decision in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., emphasizing that insolvency proceedings cannot be used as an enforcement tool for disputed debts.
This judgment serves as a critical reminder to operational creditors that claims involving genuine disputes and pending arbitration cannot be fast-tracked through insolvency proceedings. It reinforces the principle that the CIRP process is intended for undisputed defaults and not for resolving complex contractual disagreements.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 Section 9 petition by operational creditor - Petition not maintainable where there existed a pre-existing dispute regarding invoices, inventory verification, condition of goods, post-termination charges and reconciliation of accounts - Where agreements stood terminated and disputes were already subject matter of proceedings under Section 9 of Arbitration and Conciliation Act and interim protection was granted by Delhi High Court, claim required adjudication through arbitration and could not be used for initiating CIRP.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 8, 9; Arbitration and Conciliation Act, 1996 Section 9
