Unusable Commercial Premises & Disruption Of Essential Services Constitute Pre-Existing Dispute: NCLAT Delhi

The Principle Bench of the National Company Law Appellate Tribunal (NCLAT) in New Delhi on 6 May 2026 held that disputes relating to unusable commercial premises, disruption of essential services, and failure to maintain operational infrastructure constitute a genuine pre-existing dispute sufficient to reject a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC).

Judicial Member Justice Mohd. Faiz Alam Khan and Technical Member Naresh Salecha upheld the order of the National Company Law Tribunal (NCLT), Mumbai Bench-IV, which had rejected the Section 9 application filed by Hotel Horizon Private Limited against Tea4Health Private Limited. They held:

“……. keeping in view the fact that appellant was inducted into the CIRP following declaration of its account as NPA and remained therein from 29.01.2019 to 07.02.2020 the allegations and disputes mentioned in IA No. 2011 of 2019 could not be termed as moonshine particularly when the effective orders have been passed by the Adjudicating Authority to restore water electricity etc. and also for police assistance.”

The dispute arose from a leave and licence agreement dated 6 March 2018 between the parties for a commercial unit situated in Hotel Horizon's premises at Juhu, Mumbai. The premises were licensed to Tea4Health for operating a restaurant under the name “Wine Villa”.

Hotel Horizon claimed that Tea4Health defaulted on payments of about Rs. 2.62 crore towards licence fees, common area maintenance charges, air conditioning, water, infrastructure charges, and interest. It relied on invoices raised between 2018 and 2019, along with partial payments, Tax Deducted at Source deductions, and cheques to argue acknowledgment of liability.

Tea4Health disputed the claim and contended that it used the premises only until September 2019 because Hotel Horizon failed to keep the premises fit for restaurant operations. It alleged repeated disruption of essential services, including water supply cuts, air conditioning failure, poor sanitation, security issues, and power outages. It further alleged obstruction of access, particularly after Hotel Horizon entered insolvency proceedings in January 2019.

The Appellate Tribunal examined MA No. 2011 of 2019 filed by Tea4Health before the NCLT during the Corporate Insolvency Resolution Process of Hotel Horizon. In that application, Tea4Health sought restoration of water supply, functioning of centralised air conditioning, police assistance for unhindered access, sanitation measures, and restraint on interference allegedly caused by persons linked to the former management.

The Tribunal noted that the NCLT had already passed multiple interim directions for restoration of water and air conditioning services and for police assistance to ensure access to the premises. It also relied on contemporaneous emails and police complaints placed on record, which supported Tea4Health's grievance regarding disruption of essential services and obstruction.

On that basis, the NCLAT held that the disputes raised could not be treated as illusory or “moonshine”.

Relying on the Supreme Court's ruling in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, (2018) 1 SCC 353, the Bench reiterated that at the Section 9 stage, the adjudicating authority must examine whether a “plausible contention” exists requiring further investigation and whether the dispute is genuine and supported by material on record.

Accordingly, the NCLAT dismissed the appeal for lack of merit.