NCLT Mumbai: Part-Payments After Section 9 Filing Do Not Defeat ₹1 Crore Threshold Under IBC

March 17, 2026 : The National Company Law Tribunal (NCLT), Mumbai Bench-VI, has reaffirmed that part-payments made by a corporate debtor after the filing of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) do not dilute or defeat the statutory threshold requirement prescribed under Section 4 of the Code. The Tribunal clarified that the relevant date for determining whether the minimum default threshold of ₹1 crore is met is the date of filing of the application, not any subsequent stage.

The ruling came in Omshree Agro Tech Private Limited v. Kasturi Farm Private Limited (CP (IB) No. 1099/MB/2025), where the operational creditor sought initiation of the Corporate Insolvency Resolution Process (CIRP) over unpaid dues arising from the supply of soya de-oiled cake used in poultry feed.

According to the detailed order pronounced on 17 March 2026, the operational creditor claimed a total default of ₹1,38,98,889, including principal and interest. The Tribunal noted that the applicant had supplied goods through multiple invoices, out of which a substantial amount remained unpaid despite several payments made by the corporate debtor. The ledger reflected an outstanding principal exceeding ₹1 crore, with the last payment recorded on 4 May 2024.

A statutory demand notice dated 1 June 2024 under Section 8 of the Code was duly served on the corporate debtor, which failed to respond within the prescribed period.

The corporate debtor argued that the application was not maintainable as the outstanding amount fell below the ₹1 crore threshold, citing part-payments made after receipt of the demand notice, including ₹25 lakh. It also raised allegations of a pre-existing dispute concerning the quality of goods supplied.

Rejecting these submissions, the Tribunal held that the threshold requirement must be assessed as on the date of filing of the application (1 July 2024), when the default admittedly exceeded ₹1 crore. It observed that subsequent payments cannot retrospectively nullify the default.

Relying on the NCLAT ruling in Devika Resources Pvt. Ltd. v. MAA Manasha Devi Alloys Pvt. Ltd., the Bench reiterated that reduction of the claim amount below the statutory threshold during the pendency of proceedings does not render a Section 9 application non-maintainable.

The Tribunal further emphasised the scheme under Sections 8 and 9 of the Code, noting that upon receipt of a demand notice, the corporate debtor is required to either pay the entire unpaid operational debt within ten days or bring to notice the existence of a genuine pre-existing dispute. Partial payment without clearing the full dues does not bar initiation of insolvency proceedings.

On the issue of dispute, the Bench found that the corporate debtor failed to produce any credible evidence to substantiate its claims regarding defective goods. The allegations were termed “moonshine and illusory,” particularly in light of the fact that no reply was filed despite adequate opportunity, and the right to file a reply had been closed by the Tribunal.

The Tribunal concluded that all requirements under Section 9 of the IBC were satisfied, including existence of operational debt, occurrence of default, proper service of demand notice, and absence of a genuine dispute. Accordingly, the application was admitted, and CIRP was initiated against the corporate debtor.

A moratorium under Section 14 was declared, and Mr. Rajesh Kumar Mittal was appointed as the Interim Resolution Professional (IRP) to take over the management of the corporate debtor.

Case Details:
Omshree Agro Tech Private Limited v. Kasturi Farm Private Limited
CP (IB) No. 1099/MB/2025
Coram: Shri Nilesh Sharma (Judicial Member) and Shri Sameer Kakar (Technical Member)