February 26, 2026 : The National Company Law Appellate Tribunal, Principal Bench, New Delhi, has dismissed an appeal filed by Drive India Enterprise Solutions Ltd., upholding the rejection of its insolvency application against Essline Engineers and Consultants Pvt. Ltd. on the ground that a genuine pre-existing dispute existed between the parties.
The judgment, delivered on 25 February 2026 by a Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), arose out of Company Appeal (AT) (Insolvency) No. 197 of 2022. The appeal challenged an order dated 15 November 2021 passed by the National Company Law Tribunal, New Delhi Bench (Court-II), which had dismissed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.
Drive India had entered into High Sea Sale Agreements with Essline between February 2017 and March 2018 for the supply of mobile parts and batteries. It claimed outstanding dues of ₹7,41,39,165 and issued a demand notice on 11 December 2019 under Section 8 of the IBC.
Essline, in its reply dated 19 December 2019, denied liability and asserted that accounts had already been reconciled. It maintained that no sum was payable after adjusting amounts involving BTM Exports Limited, its holding company.
The corporate debtor relied on a letter dated 4 October 2018, wherein it had informed Drive India of an adjustment of ₹3,99,47,076.92 towards receivables linked to BTM Exports Limited. The adjustment was reflected in the ledgers of both entities.
Drive India argued before the appellate tribunal that this adjustment was unilateral and never acknowledged by it. However, the record showed that after receiving the adjustment letter, Drive India responded by requesting ledger details in Excel format, which were subsequently provided.
The Appellate Tribunal noted that multiple correspondences had taken place between the parties well before the issuance of the demand notice. These included balance confirmations, ledger exchanges, and account adjustments.
The Bench observed that the corporate debtor had issued a notice of dispute immediately upon receiving the demand notice and had supported its defence with ledger accounts and documentary material. The dispute, therefore, was not an afterthought.
Relying on the Supreme Court’s ruling in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., the Tribunal reiterated that at the stage of admission of a Section 9 application, the Adjudicating Authority is only required to determine whether a plausible dispute exists. It is not expected to conduct a detailed adjudication on merits.
The judgment also referred to subsequent Supreme Court precedents emphasizing that the IBC is not a substitute for a recovery mechanism and that insolvency proceedings cannot be triggered where a real dispute exists prior to the demand notice.
Holding that the materials on record clearly demonstrated a pre-existing dispute supported by evidence, the Appellate Tribunal found no infirmity in the NCLT’s decision. The appeal was accordingly dismissed.
Cause Title: Drive India Enterprise Solutions Ltd. Through Its Authorized Representative vs. Essline Engineers and Consultants Pvt. Ltd.
Case Number: Company Appeal (AT) (Insolvency) No. 197 of 2022
Coram: Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member)
