Section 9 IBC: When Can an Operational Creditor Approach NCLT?

The short answer

An operational creditor may apply under Section 9 of the Insolvency and Bankruptcy Code, 2016 to the National Company Law Tribunal (NCLT) to start the corporate insolvency resolution process only if the Code’s conditions are met.

Those conditions, in plain language:

1. There is an operational debt (goods, services, or specified statutory dues — Sections 5(20) and 5(21)), not a financial facility dressed up as an invoice.
2. There is a default of at least the notified minimum. As on the date of this article that minimum is ₹1 crore (Ministry of Corporate Affairs notification dated 24 March 2020). Re-check the current figure before filing.
3. A demand notice under Section 8 has been delivered, in the prescribed form.
4. There is no genuine pre-existing dispute.

The IBC is not a collections tribunal and not a faster civil court.

This is general information for creditors dealing with companies that may fall before the NCLT Hyderabad Bench. It is not a prediction that any application will be admitted.

The operational-creditor sequence

1. Assemble invoices, purchase orders, contracts, delivery records, and bank statements.
2. Serve a Section 8 demand notice, in the form the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules prescribe, giving the corporate debtor the statutory period to pay or to bring a dispute on record.
3. If unpaid and undisputed in the relevant sense, file a Section 9 application with those papers.

The Mobilox test

Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 is still the case a Hyderabad Bench will be taken to on “dispute”. The Tribunal looks for a real dispute about the debt, existing before the notice — not a bluster invented after the advocate’s letter. Correspondence, debit notes, quality complaints, and earlier legal notices often decide that question.

Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407 explains “default” for the Code. Read it before treating every overdue invoice as an insolvency event.

When Section 9 is the wrong tool

• the debtor is not a corporate person the Code covers;
• the amount is below the notified threshold;
• there is a genuine pre-existing dispute;
• you are in substance a financial creditor (different sections);
• you need a simple money decree against an individual — that is the civil court.

Related: insolvency and NCLT practice. Contact with the invoices and the notice, not a spreadsheet screenshot.

Nothing in this article is a prediction of admission under Section 9 or of any resolution plan.