Insolvency Plea Admitted against Kraft Paper Manufacturer: NCLT Finds Debt and Default Proven u/s 9 IBC [Read Order]

The National Company Law Tribunal (NCLT), Bengaluru Bench, has admitted an insolvency petition filed by the applicant under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. The tribunal found that the debt and default were clearly established, noting that the corporate debtor failed to pay operational dues exceeding ₹ 1.96 crore despite statutory demand notices and acknowledged liability, thereby warranting initiation of the Corporate Insolvency Resolution Process (CIRP).

The petition, e‑filed on 9 January 2026, sought initiation of the Corporate Insolvency Resolution Process (CIRP) for non‑payment of operational dues amounting to ₹ 1.96 crore, arising from 14 invoices issued between 5 December 2024 and 31 December 2024. The first default was recorded on 5 January 2025.

The applicant, Valufocus, had issued statutory demand notices on 15 July 2025 and 15 October 2025, both duly served on the company and its director, but received no payment or dispute response. The debtor had made only a token payment of ₹ 4.14 lakh, leaving a principal balance of ₹ 1.66 crore.

In its defence, Devkiran argued that the petition was premature, citing ongoing settlement talks and financial stress. It also referred to parallel proceedings under the SARFAESI Act, 2002, and claimed that the invoices lacked specific due dates.

Rejecting these contentions, the Bench comprising  Sunil Kumar Aggarwal (Judicial Member) and Radhakrishna Sreepada(Technical Member) held that the evidence, including invoices, ledger confirmations, and the director’s admission of liability exceeding ₹ 1 crore, proved the existence of operational debt and default. The tribunal observed that mere settlement discussions do not amount to a “pre‑existing dispute” under Sections 8 and 9 of the IBC.

Citing the Supreme Court’s ruling in Innoventive Industries Ltd. v. ICICI Bank, the Bench reiterated that at the admission stage, the adjudicating authority must only verify debt and default. Since both were established, the petition was allowed.

Accordingly, the tribunal admitted the insolvency plea and declared a moratorium under Section 14 of the IBC, restraining all suits, recoveries, and asset transfers by the corporate debtor.

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