NCLAT: Mere Stamping of Invoices Doesn’t Amount to Debt Acknowledgment Amid Pre-Existing Dispute
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi, has reiterated that the mere stamping or acknowledgment of invoices by employees at the site office of a Corporate Debtor does not amount to an unequivocal admission of debt, particularly in the presence of unresolved pre-existing disputes. The Bench comprising Justice Ashok Bhushan (Chairperson), Mr. Arun Baroka, and Mr. Barun Mitra (Technical Members), upheld the Adjudicating Authority’s dismissal of a Section 9 petition filed by Tirupati Drilling & Mining Services Private Limited, holding that the requirements of Section 8(2)(a) of the Insolvency and Bankruptcy Code, 2016 (IBC), were not satisfied in the absence of a clear and undisputed debt.
The appeal arose from a work arrangement between the Corporate Debtor, Sadbhav Engineering Limited, and the Operational Creditor, Tirupati Drilling & Mining Services. Sadbhav Engineering had been awarded mining works at Banduhurang Opencast Mines in Jamshedpur by Uranium Corporation of India Ltd (UCIL). It, in turn, issued a work order to Tirupati Drilling for drilling operations. Initially issued in 2017, the work order was extended until 31 March 2020. Invoices were raised by the Operational Creditor for the period between November 2018 and February 2020. Despite repeated demands, Sadbhav Engineering allegedly failed to clear the outstanding dues.
The Operational Creditor claimed a total outstanding of ₹4.07 crore and issued a demand notice under Section 8 of the Code on 31 December 2021. Receiving no satisfactory response, an application under Section 9 was filed. However, the Adjudicating Authority (NCLT Ahmedabad Bench) rejected the petition, citing the existence of a pre-existing dispute.
Challenging this decision, the Appellant contended that the Corporate Debtor’s objections were vague and unsupported, and hence did not constitute a “notice of dispute” within the meaning of the law. It was argued that letters dated 2 March 2020 and 20 June 2020 from the Corporate Debtor lacked specificity and evidence, and the claims of the Appellant had been admitted without contemporaneous objection. The Appellant also asserted that the invoices were never disputed at the time of their receipt and that the conduct of the Corporate Debtor in making partial payments affirmed its liability.
The Respondent, however, presented a different picture. It submitted that the total amount claimed was exaggerated and repeatedly contested before the issuance of the demand notice. In its reply to a legal notice dated 18 February 2020, the Corporate Debtor clearly disputed the amount claimed, stating that only ₹68.39 lakh was due, inclusive of a security deposit of approximately ₹5.97 lakh. It also emphasized that the work done was subject to certification by a third-party agency as mandated by UCIL, and invoices without such validation lacked evidentiary value. It was further stated that the material supplied by the Appellant was substandard, causing alleged losses of over ₹12 crore.
The NCLAT carefully analyzed the correspondence exchanged between the parties. It observed that the dispute regarding the quantum of the claimed amount had been raised multiple times through formal communications well before the issuance of the demand notice. The Tribunal referred to letters from the Corporate Debtor dated 2 March 2020 and 20 June 2020 which specifically contested the calculation of dues and indicated discrepancies in the amounts demanded. The Tribunal also noted that the Appellant had continued to claim the same higher amount despite clear objections from the Respondent, suggesting that the dispute had remained unresolved.
The Tribunal rejected the argument that stamping of the invoices amounted to acceptance of the debt. It observed that such stamping at the site office merely indicated receipt and did not imply consent to the amounts billed. Acceptance of liability, it said, must be clear and unambiguous, especially in matters under the IBC. The Tribunal stated: “We also agree with the contention of the respondent that mere stamping of the tax/proforma invoices done at the site office by lower functionaries of the respondent is indicative of mere receipt of the same; it does not mean that the same has been accepted by the respondent company.”
Referring to the Supreme Court’s landmark decision in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [(2017) SCC Online SC 1154 (Civil Appeal No. 9405/2017)], the NCLAT held that a Section 9 application must be rejected if there is a plausible dispute raised before the issuance of the demand notice. The test, as laid down in Mobilox, is whether the dispute is illusory or feeble, or if it requires further investigation. The Tribunal noted that in this case, the dispute was neither spurious nor illusory.
Ultimately, the NCLAT upheld the Adjudicating Authority's decision, concluding that there was a genuine pre-existing dispute between the parties regarding the quantum of debt, and the claim did not meet the threshold requirements under the IBC. Accordingly, the appeal was dismissed.
Appearance
For Appellant: Mr. Abhijeet Sinha Sr. Advocate with Mr. Shaunak Mitra, Mr. Saikat Sarkar, Mr. Biswajit Kumar, Mr. Indradeep Basu and Ms. Bhavya Khatreja, Advocates.
For Respondent: Mr. Navin Pahwa Sr. Advocate with Mr. Rohan Talwar, Mr. Nilay Gupta and Mr. Uday P., Advocates.
Cause Title: Tirupati Drilling & Mining Services Private Limited Versus Sadbhav Engineering Limited
Case No: Company Appeal (AT) (Insolvency) No. 95 of 2025 & I.A. No. 395 of 2025
Coram: Justice Ashok Bhushan [Chairperson] , Mr. Arun Baroka [Member (Technical)], Mr. Barun Mitra [Member (Technical)]
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