Oral Dispute Plea Without Supporting Material Does Not Establish Pre-Existing Dispute: NCLT Ahmedabad

The National Company Law Tribunal (NCLT) at Ahmedabad has recently held that a corporate debtor's plea of an oral dispute over allegedly defective goods, without any supporting material, does not establish the existence of a genuine dispute, while admitting an insolvency plea over unpaid operational debt.

A bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma observed, “The plea of oral dispute, in absence of any supporting material, does not establish existence of a dispute,” adding that the defence constituted a “moonshine defence” raised only to evade liability.

The order came on an insolvency plea filed by Navkar Polymers against Neo Microns Private Limited, seeking initiation of the corporate insolvency resolution process over an operational debt of ₹2.54 crore arising from the supply of plastic raw materials, masterbatches, polymers and granules.

Navkar Polymers told the tribunal that it had supplied goods between July 2017 and February 2020 and maintained a running account reflecting the outstanding dues. It placed invoices, e-way bills, ledger accounts, and a computation of outstanding amounts on record. The tribunal noted material showing acknowledgment of the outstanding dues through ledger confirmations.

The operational creditor issued a demand notice on January 13, 2026. The tribunal recorded that Neo Microns did not send any reply raising a dispute within the statutory period.

Opposing the plea, Neo Microns contended that there was a pre-existing dispute regarding the quality of goods supplied and claimed that the allegedly defective material caused operational losses. It argued that these disputes had been orally communicated during the course of business. Relying on the Supreme Court's ruling in Mobilox Innovations v Kirusa Software, it argued that even a plausible dispute would be sufficient to defeat the insolvency plea.

The tribunal, however, found that Neo Microns failed to place any material on record to show that such disputes had been raised before issuance of the demand notice. It also noted that the company's own records reflected acknowledgment of the dues.

Holding that there was no pre-existing dispute and that the debt and default stood established, the tribunal admitted the plea, declared a moratorium and appointed Bimal Ashok Desai as the interim resolution professional.