NCLAT reversed the admission of Section 9 application under IBC, ...

Section 9 IBC Application Dismissed as Operational Debt Disputed Over Freight and Demurrage Charges Between Parties

March 4, 2025

Case Laws     IBC     AT

NCLAT reversed the admission of Section 9 application under IBC, finding the existence of a genuine dispute regarding operational debt. The tribunal determined that freight charges were not unequivocally admitted, as payment was conditional upon receipt of compliant debit notes. Regarding demurrage charges, correspondence evidenced ongoing disputes between parties, with Corporate Debtor consistently challenging the claimed amount. The tribunal emphasized that Section 9 proceedings cannot be initiated for disputed operational debts, and Adjudicating Authority's role is limited to examining dispute plausibility rather than final adjudication. Since conditions under Section 9 were not fulfilled due to pre-existing disputes on both freight and demurrage claims, the appeal was allowed and impugned order set aside.

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