Tribunal Cites Pre-Existing Dispute and Penalizes Operational Creditor for Malicious Filing
In a significant decision dated July 28, 2026, the National Company Law Tribunal (NCLT) Ahmedabad Bench dismissed the insolvency petition filed by Bharati Trading Enterprises Pvt. Ltd. against Tecso Project Limited, citing a pre-existing dispute. The tribunal, comprising Member (Judicial) Sh. Shammi Khan and Member (Technical) Sh. Sanjeev Sharma, ruled that the dispute regarding the operational debt and contractual interest was genuine and existed prior to the petition's filing, thereby disqualifying the petition under Sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016.
The case centered on Bharati Trading Enterprises' claim of an operational debt amounting to Rs. 18.91 crore, inclusive of principal and contractual interest. The tribunal noted that the inclusion of a contractual interest component was disputed and raised prior to the issuance of a demand notice, meeting the criteria of a pre-existing dispute as per Supreme Court judgments in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. and Kay Bouvet Engineering Ltd. v. Overseas Infrastructure Alliance (India) Pvt. Ltd.
The tribunal scrutinized the evidence and arguments presented by both parties. It found that the interest claims were not duly recorded in the regular books of accounts and lacked acceptance by the corporate debtor, Tecso Project Limited. Furthermore, the NCLT highlighted the operational creditor's failure to establish an undisputed principal amount due.
In addition to dismissing the petition, the tribunal imposed a penalty of Rs. 2,00,000 on Bharati Trading Enterprises for abusing the insolvency process, directing the amount to be deposited with the Prime Minister's National Relief Fund. The tribunal observed that the insolvency jurisdiction was invoked for enforcing a disputed claim rather than resolving insolvency, constituting an abuse of process under Section 65 of the Insolvency and Bankruptcy Code, 2016.
This judgment underscores the necessity for operational creditors to ensure the absence of pre-existing disputes before initiating insolvency proceedings, as well as the tribunal's commitment to preventing the misuse of insolvency jurisdiction for debt recovery purposes.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - Petition under Section 9 dismissed due to pre-existing dispute regarding the computation of operational debt, contractual interest, and supporting documents.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 8, 9, 65
