Tribunal Holds Corporate Debtor's Written Admission and Dishonoured Post-Dated Cheques as Clear Evidence of Debt; Rejects Objections of Pre-Existing Dispute and Procedural Defects
In a significant ruling dated September 9, 2026, the National Company Law Tribunal (NCLT), Indore Bench, admitted a Corporate Insolvency Resolution Process (CIRP) application filed by Marvel Industries and Services Private Limited against Flexituff Technology International Limited for defaulting on an operational debt exceeding Rs. 1.14 crore.
The operational creditor (Marvel Industries) had approached the Tribunal under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC") seeking initiation of CIRP against the corporate debtor (Flexituff Technology). The dispute arose from a business arrangement initially with Flexituff Ventures International Limited (FVIL), which was later taken over by Flexituff Technology International Ltd. The Tribunal noted that the Corporate Debtor explicitly acknowledged the debt through a letter dated September 9, 2024, admitting a net payable amount of Rs. 1.92 crore, part-paid Rs. 40 lakh, and issued four post-dated cheques for the balance amount. Three of these cheques were dishonoured due to insufficient funds.
The Corporate Debtor contested the petition, arguing that the original contract was with FVIL, not with them, raising issues of privity of contract, alleged receipt of payments by the Operational Creditor from customers or insurance claims, and disputing the completeness of the application on grounds such as absence of bank certification and the date of default in the application form. The Corporate Debtor also claimed coercion in obtaining the admission letter.
After examining the evidence and submissions, the Tribunal rejected the Corporate Debtor's objections. The Tribunal emphasized that the Corporate Debtor's own written admission of the debt, part-payment, and issuance of post-dated cheques constituted a clear acknowledgment of liability, superseding any initial privity issues with FVIL. The Tribunal also applied the test laid down in the landmark Supreme Court judgment of Mobilox Innovations Private Limited v. Kirusa Software Private Limited (2018) 1 SCC 353, holding that the defence of pre-existing dispute must be real and supported by evidence. Since the Corporate Debtor failed to provide any concrete evidence and even made further payments after the alleged coercion, the Tribunal held that no pre-existing dispute existed.
Additionally, procedural objections such as the non-mention of the date of default in the form and absence of a bank certificate were held to be formal defects not affecting the maintainability of the petition, especially when the date of default was otherwise ascertainable from the demand notice and related documents.
Consequently, the Tribunal admitted the petition, initiated CIRP against Flexituff Technology International Limited, and declared a moratorium as per Section 14 of the IBC. Ms. Apeksha Kekre was appointed as the Interim Resolution Professional to manage the process. The Tribunal directed the Corporate Debtor's officers and managers to extend full cooperation to the IRP and authorised the IRP to take control of the company's assets, with police assistance if necessary.
This ruling reiterates the principle that an operational debt duly acknowledged by the corporate debtor through written admission and part-payment, supported by dishonoured cheques, is sufficient ground for initiating insolvency proceedings under the IBC. It also underscores the stringent requirement for any defence of pre-existing dispute to be substantiated by credible evidence.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Application under Section 9 for initiation of Corporate Insolvency Resolution Process - Acknowledgment of operational debt by Corporate Debtor through part-payment, issuance of post-dated cheques, and written admission of debt - Objections regarding pre-existing dispute, absence of bank certificate, and omission of default date in Form 5 rejected as unsustainable - Application held maintainable and admitted.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 3(12), 4, 5(6), 8(2)(a), 9, 9(5)(ii), 14; Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 Rule 6; Bankers' Books Evidence Act
