No Insolvency Proceedings If Debt Settled After Demand Notice: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has ruled that insolvency proceedings under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, cannot be initiated if the corporate debtor has settled the debt after receiving a demand notice under Section 8 of the Code.

The NCLAT New Delhi bench observed that the corporate debtor had already discharged its liability, barring a minor disagreement over the final payment.

The tribunal found no grounds for initiating the Corporate Insolvency Resolution Process (CIRP).

The appeal was allowed, and the order admitting the Section 9 application was set aside.