An NCLT notice in an insolvency petition is not like a civil suit that can be stretched out for years. If the petition is admitted, your board is suspended the same day, an interim resolution professional takes control of the company's bank accounts and premises, and a committee of creditors decides the company's future. Promoters often learn how serious this is only after admission, when the options have narrowed sharply.
The time to defend is before admission. The defences that work are specific and technical: a genuine dispute that existed before the demand notice, no default, a debt below Rs 1 crore, a time-barred claim, or a petition that is defective. Since the 2026 amendment, admission of lenders' petitions is mandatory once a default is shown, so arguments about the company's viability will no longer help. This page explains the defences that still do.
हिंदी में सारांश
अगर आपकी कंपनी के खिलाफ NCLT में धारा 7 या धारा 9 के तहत दिवाला याचिका दायर हà¥à¤ˆ है, तो याचिका सà¥à¤µà¥€à¤•à¤¾à¤° (admit) होने से पहले ही बचाव करना ज़रूरी है। सà¥à¤µà¥€à¤•à¤¾à¤° होते ही बोरà¥à¤¡ निलंबित हो जाता है और IRP कंपनी संà¤à¤¾à¤² लेता है। मज़बूत बचाव हैं: नोटिस से पहले का असली विवाद, कोई चूक नहीं, रकम ₹1 करोड़ से कम, दावा समय-सीमा से बाहर, या याचिका में तकनीकी कमी। 2026 के संशोधन के बाद कंपनी "चलती हà¥à¤ˆ और मà¥à¤¨à¤¾à¤«à¥‡ में है" — यह दलील काम नहीं आà¤à¤—ी।
Is this your situation?
- Your company has received an NCLT notice in a Section 7 or Section 9 petition
- A supplier sent a demand notice and you replied, or forgot to reply
- You dispute the quality of goods or services, and you said so in writing earlier
- You have already paid part or all of the amount claimed
- The default claimed is more than three years old
- The amount in default is close to, or below, Rs 1 crore
- You want to settle but the creditor is refusing reasonable terms
- The petition has just been admitted and you need to act within 30 days
Defences that work before admission
Pre-existing dispute (Section 9 petitions)
If you raised a real dispute about the goods, services or amount before receiving the demand notice, the NCLT must reject a supplier's petition. The test from Mobilox Innovations (2017) is plausibility, not proof. Your earlier emails, debit notes and rejection reports are the evidence.
No default or no debt due
Payments already made, amounts not yet due under the contract, conditional payments that never became payable, or a debt that is really an equity investment can all defeat a petition.
Below the Rs 1 crore threshold
The default must be at least Rs 1 crore. Disallowed interest, already-paid invoices or disputed items can bring the claim below the threshold.
Limitation
Petitions must generally be filed within three years from default. If there has been no valid written acknowledgment since then, a time-barred claim cannot be revived through insolvency.
Not a financial debt
For Section 7 petitions, the creditor must show the money was disbursed against the time value of money. Advances against goods, security deposits and some interest-free funding may not qualify.
Defects in notice or petition
Demand notices not delivered to the registered office, petitions filed before the 10 days expired, wrong forms, lack of authority to file, and the COVID-period bar on defaults between 25 March 2020 and 24 March 2021.
What changed in 2026 for companies
The Insolvency and Bankruptcy Code (Amendment) Act, 2026, in force from 26 May 2026 for these provisions, changes the defence landscape in three important ways:
- Admission of lender petitions is mandatory once default is shown. The NCLT must admit a Section 7 application if the default is established, the application is complete and the proposed resolution professional has no pending disciplinary proceedings. The earlier argument, based on the Vidarbha Industries decision, that the tribunal could decline admission because the company was viable, is no longer available.
- Faster decisions. The NCLT is expected to decide applications under Sections 7, 9 and 10 within 14 days and must record reasons for any delay. You may not get many adjournments.
- A record of default from an information utility is sufficient proof of default in lender petitions. If you dispute the utility record, raise it with the utility and before the tribunal immediately.
The practical lesson: focus the defence on the debt, the default, the threshold and limitation, and prepare it from day one.
How we defend a petition
Read the petition and the notice history
We check the demand notice (for Section 9), the date and mode of delivery, your reply, the invoices or loan papers relied on, and how the creditor has calculated the default.
Collect your evidence fast
We ask for emails, letters, debit notes, test reports, meeting minutes and payment proofs, especially anything dated before the demand notice. This evidence often decides the case.
File a focused reply
The reply sets out the defences with documents, not a long list of general denials. We attach a chart of payments and disputed items so the bench can see the point quickly.
Argue at the admission hearing
Admission hearings are short. We prepare a short note of submissions and a compilation of key documents so the argument lands in the time available.
Explore settlement in parallel
Many creditors file to get paid. If part of the money is owed, a structured settlement before admission avoids the risk entirely. Once admitted, withdrawal needs 90% of the creditors' committee and is possible only in a narrow window. See settle and withdraw.
Appeal immediately if admitted
An appeal to the NCLAT must be filed within 30 days of the order, with at most 15 more days for sufficient cause. We seek an urgent stay where the facts justify it. See stay of NCLT order.
Time and typical cost
Our fee is fixed in writing for each stage and does not depend on the outcome.
| Stage | Usual time | What it involves |
|---|---|---|
| Review of petition and documents | 2 to 4 days | Our fee for the review |
| Reply and document compilation | 1 to 3 weeks, depending on the date given | Drafting, affidavits, compilation |
| Admission hearing | Often within weeks; the law expects a decision in 14 days | Hearings, written submissions |
| Settlement talks | Can run alongside | Drafting settlement terms and consent filings |
| NCLAT appeal if admitted | Must be filed within 30 days (+15 at most) | Appeal fee, drafting, stay application |
Documents to gather now
The claim against you
- NCLT notice, petition and annexures
- Demand notice and your reply, with dates
- Loan papers or invoices relied on by the creditor
Your side of the story
- Emails and letters raising disputes, with dates
- Debit notes, rejection notes, test reports
- Pending suits or arbitrations about the same debt
- Proof of payments made
Company records
- Latest audited financial statements
- Board resolution authorising the defence
- MCA master data and registered office history
- Bank statements for the relevant period
How we approach a defence
- Honest assessment on day one: if your defence is weak, we will tell you, and focus on settlement before the window closes.
- Evidence over adjectives: NCLT benches decide on documents. We build a tight record rather than long pleadings.
- Speed: the 2026 timelines leave little room. We work to the hearing date, not the next adjournment.
- Settlement-ready drafting: if a deal is struck, we draft terms that protect the company if the creditor does not keep its side.
- Written fees: agreed for each stage, never linked to the result.
A Section 9 petition and an old email
Here's a made-up example. A Ghaziabad electronics assembler received an NCLT notice in a Section 9 petition by a component supplier claiming Rs 1.35 crore. The assembler's purchase head remembered complaining about a defective batch the previous year.
We searched the email archive and found three emails, all sent months before the demand notice, rejecting two batches and asking for replacement, and a debit note for Rs 41 lakh that the supplier had acknowledged. We filed a short reply attaching them. The NCLT held that a plausible dispute existed before the demand notice and dismissed the petition, leaving the supplier free to sue in a civil court if it wished.
Mistakes companies make when a petition is filed
- Ignoring the demand notice: the 10-day reply to a supplier's notice is often the only chance to put a dispute on record before the NCLT stage.
- Raising a new dispute for the first time in court: tribunals give little weight to complaints that surface only after the petition. If there were earlier complaints, find them.
- Relying on viability arguments: after the 2026 amendment, "we are profitable" is not a defence to a lender's petition once default is shown.
- Sending junior staff to hearings unprepared: admission hearings are short. The bench needs a clear point and the documents to support it.
- Leaving settlement too late: once the petition is admitted, withdrawal needs 90% of the committee and a narrow window. The cheapest time to settle is before admission.
- Missing the appeal deadline: an appeal against admission must reach the NCLAT within 30 days; only 15 more days can be allowed for sufficient cause.
If the petition is admitted despite your defence
Admission is not always the end. On the day of admission, the interim resolution professional takes over management. Directors must cooperate and hand over records. At the same time, the company and its directors can appeal to the NCLAT within 30 days and seek urgent interim relief, such as a direction that the committee of creditors not be constituted or not take major decisions while the appeal is heard. See urgent stay of an NCLT order.
If the appeal is unlikely to succeed, the realistic options are a settlement and withdrawal under Section 12A within the window after the committee is formed and before plans are invited, or participation in the resolution process, including a promoter bid if eligible under Section 29A. Directors should also take advice on their personal position, especially if they gave guarantees. See rights of directors during insolvency.
Checklist when you receive notice of a petition
- Note the next date of hearing and the NCLT bench
- Get the full petition with all annexures
- Check whether the default amount is at least Rs 1 crore
- Check limitation and any acknowledgments relied upon
- Gather emails or letters showing any dispute before the demand
- Check the authority of the person who signed the petition
- Prepare evidence of payments or set-offs
- Decide whether to settle, defend, or both
Grounds that commonly work
Defences that tend to succeed are those based on documents. A pre-existing dispute, shown by emails, letters or a pending suit before the demand notice, defeats a Section 9 application under Mobilox. A claim that is time-barred cannot found an application, though acknowledgments in balance sheets may extend the period (Bishal Jaiswal). An amount below Rs 1 crore cannot be the basis of an application. Defects in the demand notice or in authorisation can also lead to rejection, though tribunals often allow these to be cured.
Defences that rarely succeed include claims of temporary cash flow problems, promises to pay later, or complaints that the creditor is using insolvency as a recovery tool. Since Vidarbha Industries (2022), there has been debate on whether the NCLT has discretion to refuse admission of a Section 7 application; later decisions have narrowed that discretion. See Section 12A settlement where defence is not realistic.
A Section 7 application with a time-barred debt
Here's a made-up example. A Delhi lender filed a Section 7 application against a Noida company, claiming a loan that was declared an NPA eight years earlier. The lender relied on a letter from the company asking for more time, written five years after the NPA date.
We showed that the letter was written after the three-year limitation had already expired, so it could not revive the claim. Under Section 18 of the Limitation Act, an acknowledgment must be made before the period ends. The company's balance sheets did not show the loan as owing to the lender. The NCLT dismissed the application as barred by limitation.
Frequently Asked Questions
Can the NCLT admit a petition without hearing my company?
The company is given notice and a hearing. But hearings are short and the law expects a decision in 14 days, so you must be ready from the first date.
Is "the company is profitable and running" a defence?
Not for lender petitions after the 2026 amendment. If the default is proved and the application is complete, admission is mandatory.
What counts as a pre-existing dispute?
A genuine dispute about the debt, quality, quantity or performance, raised before the demand notice was received, or a pending suit or arbitration about it.
We never received the demand notice. Does that help?
It can, if the notice was not delivered to the registered office or registered email. The NCLT looks at proof of dispatch and delivery.
Can we settle after the petition is filed?
Yes. Before admission, the creditor can withdraw the petition. After admission, withdrawal needs 90% of the creditors' committee and is allowed only between the committee's formation and the first invitation for resolution plans.
What happens to directors if the petition is admitted?
The board's powers are suspended and the interim resolution professional takes over management. Directors must cooperate. See rights of suspended directors.
How quickly must we appeal if the petition is admitted?
Within 30 days of the order. The NCLAT can allow only 15 more days for sufficient cause, and no more.
How are your fees decided?
By the size of the claim and the stage, agreed in writing before we start. They do not depend on the result.
Received an NCLT Notice? Act Now
Send us the petition and the demand notice. We will review your defences quickly and tell you whether to fight, settle or both.
This page gives general information about the law as it stood when it was last reviewed. It is not legal advice on your case and does not promise any result. IBC rules and NCLT procedures change often, so outcomes depend on your own documents, dates and facts.
Need help with Insolvency Petition Filed Against Your Company - Defence?
Send us the notice, the petition or the order. We will tell you where you stand, which bench hears it and the date the next step is due, in plain words.
