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The NCLAT upheld the dismissal of the CIRP petition under Section 9 IBC, emphasizing that the Adjudicating Authority rightly declined to initiate insolvency proceedings due to the existence of a pre-existing dispute concerning the debt. The Tribunal clarified that the mere non-response to a Section 8 notice does not amount to an admission of debt and that the burden lies on the creditor to establish an undisputed default. It further observed that the Adjudicating Authority erred in presuming the existence of the work order and applying the 90-day payment period under Section 10A IBC without sufficient proof. Since the foundational contractual terms remained unascertained, the invocation of CIRP was premature. Consequently, the order dismissing the petition was affirmed without interference, reinforcing that IBC proceedings cannot be used as a debt recovery tool where genuine disputes exist.
The NCLAT upheld the dismissal of the CIRP petition under Section 9 IBC, emphasizing that the Adjudicating Authority rightly declined to initiate insolvency proceedings due to the existence of a pre-existing dispute concerning the debt. The Tribunal clarified that the mere non-response to a Section 8 notice does not amount to an admission of debt and that the burden lies on the creditor to establish an undisputed default. It further observed that the Adjudicating Authority erred in presuming the existence of the work order and applying the 90-day payment period under Section 10A IBC without sufficient proof. Since the foundational contractual terms remained unascertained, the invocation of CIRP was premature. Consequently, the order dismissing the petition was affirmed without interference, reinforcing that IBC proceedings cannot be used as a debt recovery tool where genuine disputes exist.
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