Operational Creditor's Application Under IBC Fails as Tribunal Upholds Genuine Disputes and Failure to Meet Statutory Threshold
In a significant ruling, the National Company Law Tribunal (NCLT), Ahmedabad Bench, has dismissed the insolvency application filed by Jindal (India) Limited against Kunal Structure (India) Private Limited. The decision was delivered by the bench comprising Mrs. Chitra Hankare and Dr. Velamur G Venkata Chalapathy on July 17, 2026, highlighting the existence of genuine disputes and the failure to meet the statutory threshold for operational debt under the Insolvency and Bankruptcy Code, 2016 (IBC).
The case revolved around an application under Section 9 of the IBC, 2016, where Jindal (India) Limited, the Operational Creditor, sought to initiate insolvency proceedings against Kunal Structure (India) Pvt. Ltd., the Corporate Debtor, for an alleged non-payment of Rs. 1,02,18,981. The amount included invoices for the supply of goods and interest charges on a Letter of Credit.
The Corporate Debtor contested the application, raising serious disputes over the quality and quantity of goods supplied. It was argued that the disputes were pre-existing and genuine, as evidenced by communication exchanges between the parties. Furthermore, the Corporate Debtor pointed out that the claim did not meet the statutory threshold of Rs. 1 crore, as certain deductions had been agreed upon, and the interest charges were not justifiably included.
The tribunal observed that the disputes raised by the Corporate Debtor regarding the quality, thickness variation, and short weight of the materials were genuine. The bench also noted the invocation of arbitration proceedings by Jindal (India) Limited during the pendency of the application, which further established the existence of pre-existing disputes, rendering the insolvency application not maintainable.
In its detailed judgment, the NCLT emphasized that the inclusion of LC discounting charges to meet the threshold limit was not satisfactorily justified. The tribunal concluded that the marginal disputes on the quantity supplied and the subsequent arbitration proceedings indicated that the matter was not fit for insolvency proceedings under Section 9 of the IBC.
The bench's decision underscores the importance of ensuring clear and undisputed claims when initiating insolvency proceedings. It also highlights the role of arbitration in resolving commercial disputes, especially when pre-existing disputes are evident.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Application under Section 9 of the Code dismissed due to disputes over quality and quantity of goods supplied, and failure to meet the statutory threshold of Rs. 1 crore for operational debt. Arbitration proceedings invoked during pendency of the application.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 - Section 9; Arbitration and Conciliation Act, 1996
