NCLAT Defines Boundaries of Section 9 Applications by Operational Creditors

## The Jurisprudential Stance The National Company Law Appellate Tribunal (NCLAT) has reaffirmed that the Insolvency and Bankruptcy Code (IBC) cannot be turned into a summary debt collection mechanism. ## Test of Pre-Existing Dispute Where the Corporate Debtor shows credible evidence of pre-existing dispute—such as email correspondence pointing out defective goods or delayed delivery prior to the issuance of Section 8 demand notice—the adjudicating authority must reject the Section 9 petition. The standard remains whether the dispute is plausible and not spurious or illusory.