Case Overview

This case involves an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by M/s Mototech Co. Limited (Operational Creditor), a South Korea-based company engaged in wholesale of electricity and automotive electronic components, against M/s Jay Switches India Private Limited (Corporate Debtor). The application sought initiation of Corporate Insolvency Resolution Process (CIRP) for an alleged default of ₹1,10,81,779.

The dispute arose from two purchase orders: PO No. 122001920 dated 17.02.2022 for 96,000 MCU units and PO No. 123001795 dated 12.11.2022 for 1,800,000 MCUs, 200,000 XTALs, and 400,000 TACT switches. The Corporate Debtor canceled pending orders via email on 27.11.2023. After negotiations, the Corporate Debtor acknowledged liability for remaining inventory via email on 22.03.2024 and meeting minutes dated 01.12.2024.

The Operational Creditor served a demand notice under Section 8 on 27.10.2025 claiming approximately ₹1.18 crore. On 06.11.2025, the Corporate Debtor made a partial payment of USD 48,495.60, reducing the outstanding amount below the ₹1 crore threshold. The Corporate Debtor subsequently disputed the remaining debt on 08.11.2025, arguing that the purchase orders had expired validity periods (31.03.2023 and 31.12.2023 respectively).

Analysis and Findings

The Tribunal examined the purchase orders which contained a clause (Term 9) stating "the Schedule pertains to this PO or will expire after that particular month." The Tribunal noted that neither the purchase orders nor the single produced invoice mentioned any interest rate agreement.

The Tribunal found that:

1. The principal debt amount after the partial payment was ₹76,96,800, below the statutory threshold of ₹1 crore required under Section 4 of IBC

2. The interest component of ₹33,84,979 (comprising ₹18,47,232 interest @24% from 06.12.2024 to 05.12.2025 and ₹15,37,747 delayed interest on USD 48,540) lacked contractual basis and could not be included to meet the threshold

3. A pre-existing contractual dispute existed regarding the validity of purchase orders and obligation to purchase remaining inventory

4. The Operational Creditor failed to produce sufficient invoices to substantiate the operational debt claim

The Tribunal relied on judicial precedents including Mosco International Commodities Pvt. Ltd. v. SBEC Sugar Ltd. which established that the threshold must be met on the initiation date (date of filing application) not the demand notice date, and that interest cannot be added to meet threshold without contractual agreement.

Final Outcome

The application (CP(IB)-168(PB)/2026) was dismissed on three grounds:

1. The outstanding principal amount was below the ₹1 crore threshold under Section 4 of IBC

2. A pre-existing dispute existed between the parties which the NCLT lacked jurisdiction to decide at admission stage

3. Insufficient invoice documentation to support the operational debt claim

The Tribunal directed the registry to send a copy of the order to the Insolvency and Bankruptcy Board of India. No costs were awarded.

Topics: Insolvency Proceedings, Contractual Dispute, Threshold Compliance