Dispute Over Expert’s Exit and Continued Services via Another Entity Constitutes Contractual Issue, Not an Undisputed Debt: NCLAT [Read Order]
IBC proceedings are not a substitute for the recovery of disputed contractual claims
In a recent ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has affirmed that disputes arising from the exit of a designated expert and the continuation of services through another entity are contractual in nature. It held that such disagreements cannot be treated as an undisputed operational debt under Section 9 of the Insolvency and BankruptcyCode (IBC).
The appeal has been filed by the petitioner, FTI Consulting India Pvt. Ltd challenging the order dated 31.10.2025, passed by the National Company Law Tribunal (NCLT), rejecting the Section 9 under the Insolvency and Bankruptcy Code (IBC) application that was filed. where an operational creditor sought initiation of insolvency proceedings against a corporate debtor for alleged non‑payment of invoices.
The appellant contended that the mere exit of the designated expert (Mr Montek Mayal) did not diminish its contractual capacity to perform obligations under the agreement dated 26.02.2020. It maintained that invoices raised between May 2022 and February 2023 were valid, covered by the contract, and remained unpaid despite budgets being approved.
The appellant stated that services such as expert reports and arbitration attendance were duly provided, and contended that the NCLT erred in treating the invoices as overlapping with Osborne Partners, since that contract was executed months later. Also said that the rejection of the Section 9 application was erroneous.
The respondent argued that the agreement explicitly named Mr Mayal as the primary contact and expert witness, and once he left FTI, the company could not render the contracted services. Payments made to FTI and later to Osborne Partners were claimed to be more than sufficient, with MGF alleging that FTI’s invoices were inflated and unsupported.
After hearing both sides, the appellate tribunal noted that the respondent's reply dated 25.07.2024 expressly constituted a notice of dispute under Section 8(2). It noted that the defence was neither patently weak nor unsupported, as the respondent had produced sufficient material regarding the original contract and subsequent continuation of services through Osborne Partners.
The bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) held that the Adjudicating Authority did not commit any error in rejecting the Section 9 application filed by the Appellant, and found no ground to interfere.
Accordingly, the appeal was dismissed.
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