NCLT Ahmedabad Holds Sales Incentive Property Promise Not Operational Debt Under IBC, Dismisses S.9 Plea

The Ahmedabad Bench of the National Company Law Tribunal (NCLT) on 23 June 2026 dismissed an insolvency petition filed by Green Consultancy against Jhaveri Spices Pvt. Ltd., holding that a claim arising from a sales incentive scheme promising transfer of immovable property does not qualify as “operational debt” under the Insolvency and Bankruptcy Code, 2016 (IBC), and therefore cannot sustain proceedings under Section 9.

Judicial Member Chitra Hankare and Technical Member Dr Velamur G Venkata Chalapathy held that the dispute did not arise from the supply of goods or services but from an alleged contractual promise linked to sales performance. The Bench held:

“The IBC contemplates initiation of CIRP by an operational creditor only in respect of an "operational debt', namely a claim in respect of provision of goods or services. On the facts pleaded, the debt arises from non-transfer of an immovable property under an incentive scheme and not from unpaid invoices for goods or services. The petition does not disclose any invoice for consultancy services or any agreed monetary consideration for such services. The alleged default pertains to failure to transfer an asset.”

Green Consultancy, through its proprietor Vinod Miglani, moved a petition under Section 9 of the IBC seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Jhaveri Spices Pvt. Ltd. It relied on an incentive scheme launched by the corporate debtor on 1 January 2022, under which the company promised to transfer a flat or commercial office worth Rs 1.2 crore if cumulative sales of Rs 6 crore were achieved within the stipulated period.

The applicant accepted the scheme and mobilised its distribution network to achieve the sales target. It claimed that by 31 July 2023, it had achieved sales exceeding Rs 6 crore, supported by bank statements and GST records. It further stated that the corporate debtor acknowledged the achievement in April 2023 but failed to transfer the promised property by the due date of 1 September 2023.

Green Consultancy issued demand notices under Section 8 in March and April 2025, quantifying the alleged default at Rs 1.29 crore along with interest. It contended that the failure to transfer the property amounted to a default under the IBC.

The Bench held that the claim arose from an incentive arrangement tied to sales targets and not from invoices for consultancy services or supply of goods, and therefore did not constitute operational debt. It noted:

“The submission or claim of the applicant is not on account of a debt arising out of operational debt backed by invoices of supply of materials, due and payable, but a stated scheme which does not come under the ambit of IBC 2016 as a debt which is due to be paid. The legal recourse and reliefs to be obtained are not before this tribunal under IBC 2016 and hence this application does not merit its maintainability.”

Further, the Tribunal held that Green Consultancy effectively sought specific performance of a contractual promise rather than enforcement of an operational debt. It also observed that even if the applicant achieved the sales targets, the promised consideration in the form of immovable property amounted to a reward under an incentive scheme and could not qualify as a debt due and payable under the IBC. The Members held:

“Even if it is contractual which could be linked to performance like a bonus or incentive does not come under the purview of a debt due and payable.”

Accordingly, the NCLT dismissed the petition, holding that the claim fell outside the scope of operational debt under the IBC.