Section 9 IBC: Operational Creditor Petition Against a Company

Who is an operational creditor under the IBC?

An operational creditor is anyone to whom a company owes an operational debt, and an operational debt is a claim for goods or services supplied, including employment, or a statutory due payable to the government (sections 5(20) and 5(21) of the Code). In plain terms: the vendor who delivered steel, the contractor who built the warehouse, the software firm that ran the company's systems, the landlord in some cases, the employee whose salary is unpaid. The common thread is that the money is owed because something was supplied, not because money was lent.

That line matters because it decides which section you file under. If you advanced money for interest, guaranteed a loan, or paid an advance that was in substance a loan, you may be a financial creditor and should look at section 7 instead. Where a buyer paid an advance for goods that were never delivered, the Supreme Court has treated the buyer as an operational creditor, because the claim arises from a supply contract. A wrong label is one of the commonest reasons a petition is dismissed at the first hearing, so settle this question before drafting anything.

Section 9 can be used only against a corporate debtor, which means a company or a limited liability partnership. It cannot be used against a proprietorship, a partnership firm or an individual. If your customer is a partnership firm, your remedies lie in a civil suit, arbitration or, for a guarantor of a company, the separate personal insolvency route.

Is section 9 the right tool for an unpaid invoice?

Section 9 is the right tool when the debt is clear, undisputed on paper and large, and the company is either unable or unwilling to pay. It is the wrong tool when the customer has been complaining about quality, short supply or delay, because the NCLT will dismiss the petition at the first sign of a real dispute and tell you to go to a civil court or arbitrator.

Keep in mind what the process actually does. The IBC is a law for resolving insolvency, not a debt collection statute. Once the petition is admitted, the company's board is suspended, a resolution professional takes over, and your claim joins every other creditor's claim in a collective process. In that process operational creditors usually rank behind secured lenders, and recoveries for unsecured suppliers are often a small fraction of what they are owed. The real force of section 9 lies before admission: a solvent company facing a well-founded petition will often pay or settle rather than lose control of its business.

When Advocate B.K. Singh is asked whether to file under section 9, he usually starts with two questions. First, can the company pay if it wants to? Second, will the paper trail survive a determined search for a pre-existing dispute? If the answer to the first is no, a petition may still be worth filing to protect your position and get into the claims process early. If the answer to the second is doubtful, a commercial suit or arbitration is usually the safer route, even though it is slower.

Section 9 compared with other recovery routes

An unpaid supplier usually has more than one option. The choice depends on the size of the debt, the strength of the paper trail and what the debtor company can pay.

These routes are not always exclusive. A creditor can send a section 8 notice while a cheque bounce case is pending, or file a summary suit for one set of invoices and keep section 9 in reserve. Our post on recovery options for unpaid invoices compares them in more detail, and registered micro and small suppliers should also read about MSME delayed payment claims before the Facilitation Council.

What is the minimum amount for a section 9 petition?

The default must be at least ₹1 crore. The Central Government raised the threshold under section 4 from ₹1 lakh to ₹1 crore by notification in March 2020, and it applies to petitions under sections 7, 9 and 10 alike. A default below ₹1 crore cannot found a section 9 petition, however clear the debt. The lower threshold of ₹10 lakh applies only to the pre-packaged process for MSMEs, which is a debtor-initiated scheme and not a creditor's remedy.

You can add up several unpaid invoices from the same debtor to reach the threshold, provided each is due and unpaid. Interest is the area where petitions run into trouble. If the contract or the invoices provide for interest on late payment, it is generally claimable, but tribunals look hard at a claim where a modest principal is lifted over ₹1 crore by interest alone. The safer petition is one where the principal by itself crosses the line, with interest shown separately.

Unlike section 7, a section 9 petition must rest on a default owed to the applicant itself. One supplier cannot rely on what the company owes another supplier. Several operational creditors can, however, file separate petitions against the same company, and the first one admitted starts the process for everybody.

Is your claim within limitation?

A section 9 petition must be filed within three years from the date of default, because Article 137 of the Limitation Act 1963 applies to applications under the Code. The date of default is normally the date payment fell due under the invoice or contract, not the date you sent the demand notice. Sending a notice does not restart the clock.

Limitation can be extended by a written acknowledgment of the debt signed by the company before the three years expire, under section 18 of the Limitation Act. A letter promising payment, an email from a director confirming the balance, a signed ledger confirmation or a part payment made towards the debt can each restart the period. Gather these documents before you draft, and arrange them by date. If your oldest invoices are past three years and there is no acknowledgment, leave them out of the threshold calculation rather than risk the petition. Our post on limitation periods for civil suits explains acknowledgments in more depth.

How do you send the section 8 demand notice?

The demand notice is sent in Form 3 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, or alternatively as a copy of the unpaid invoice demanding payment in Form 4. Form 3 is the usual choice because it lets you set out the debt in a structured way: the amount, the dates of default, the documents relied on and the particulars of any security. It must ask the company to pay the unpaid operational debt in full within 10 days, failing which you may start insolvency.

Rule 5 requires the notice to be delivered at the registered office of the company by hand, registered post, speed post or electronic mail to a whole-time director or key managerial person. In practice, send it by speed post to the registered office as shown on the MCA master data, and by email to the directors and the company's official address, and keep the tracking reports. If the company has moved without updating its records, delivery at the registered office on record is generally treated as valid.

The Supreme Court held in Macquarie Bank v Shilpi Cable Technologies (2017) that an advocate can send the demand notice on behalf of the creditor. Many creditors still prefer the notice to be signed by an authorised officer of the creditor company, with the advocate's covering letter, because it avoids any argument about authority. Whoever signs must hold a board resolution or written authority, and that authority will be annexed to the petition.

Before you send the demand notice: a checklist

Most problems in section 9 cases are created at the notice stage. Check these points before anything is posted.

• The debtor is a company or LLP, and you have its current registered office and CIN from the MCA records.
• The total principal in default is at least ₹1 crore, calculated invoice by invoice with due dates.
• Every invoice relied on is within three years of its due date, or there is a signed acknowledgment or part payment that extends limitation.
• You have read all emails, letters and meeting notes from the debtor for the last two years, looking for complaints about quality, quantity, delay or rates.
• There is no arbitration notice, legal notice or suit from the debtor about this contract.
• The amount demanded matches your ledger, the invoices and any GST returns, with credit notes and part payments deducted.
• The notice is in Form 3 (or Form 4), demands payment within 10 days and lists the documents relied on.
• Whoever signs has written authority from the creditor.
• You will deliver it to the registered office by speed post and by email to directors, and keep proof of delivery.

What happens in the 10 days after the demand notice?

Within 10 days of receiving the notice, the company can do one of three things under section 8(2): pay the debt, point to a dispute that existed before the notice, or do nothing. If it pays, the matter ends. If it does nothing, you can file the petition once the 10 days have run from delivery. If it replies with a dispute, you have to decide whether that dispute is real and pre-existing or an afterthought.

Count the 10 days from the date of delivery, not the date of dispatch. File the petition after the period has fully run; a petition filed on the ninth day is premature. There is no outer deadline for filing after the notice, but delay weakens the case, because it gives the company time to manufacture correspondence and because the three-year limitation keeps running from the original default.

A reply that raises a dispute does not automatically end your case. The NCLT asks whether the dispute existed before the notice was received and whether it is genuine. A reply that invents quality complaints for the first time, about goods accepted without protest months earlier, is the classic afterthought. A reply that attaches emails complaining about defects before the notice, or a pending arbitration notice, is likely to defeat the petition. How a debtor should frame that reply is the subject of our post on the pre-existing dispute defence.

Testing your file for a pre-existing dispute

The test comes from Mobilox Innovations v Kirusa Software (2017). The NCLT does not decide who is right. It only asks whether there is a plausible contention that requires further investigation, and whether the dispute is a spurious defence, mere bluster, or a real dispute supported by evidence. If there is a real dispute about the existence or the amount of the debt, the petition must be rejected even if the creditor would probably win in a civil court.

So read your own file the way the company's lawyer will. Look for emails from the debtor's site engineer about delay, purchase department complaints about rates, debit notes you never accepted, rejection slips at the gate, minutes of meetings where defects were discussed, and any letter where the debtor withheld payment against a specific complaint. A single complaint about a small part of the supply does not defeat a petition for the undisputed rest, but a complaint that goes to the root of the contract usually does.

Strong section 9 files usually have something on paper from the debtor accepting the debt: a balance confirmation, a payment plan proposed by the debtor, cheques issued and dishonoured, an email from the finance head promising payment by a date. These documents do two jobs. They show the debt is admitted, and they show that no dispute was being raised when the company had every reason to raise one.

How to file a section 9 application before the NCLT

Once the 10 days have run without payment or a genuine dispute, the petition can be prepared. A well-drafted petition is short, sequenced by date and supported by documents for every statement.

1. Prepare Form 5

   The application is made in Form 5 under Rule 6 of the 2016 Rules. It sets out the particulars of the creditor and the company, the proposed interim resolution professional (if any), the debt, the dates of default and the documents relied on. Each figure must match the demand notice and the ledger.

2. Propose an interim resolution professional

   An operational creditor may propose a registered insolvency professional as IRP, with that professional's written consent in Form 2. If you do not propose one, the NCLT asks the Insolvency and Bankruptcy Board of India to recommend a name. Proposing one speeds up the process, but you will usually bear the initial costs of the IRP until the Committee of Creditors takes over.

3. Attach the affidavit and supporting papers

   Section 9(3) requires a copy of the invoice or demand notice, an affidavit that the company has not given notice of any dispute, and other records the IBBI may specify, including any record held with an information utility. A certificate from your bank confirming that no payment was received is attached where available. Keep the board resolution authorising the filing ready as well.

4. Send a copy to the company

   Rule 6(2) requires the applicant to dispatch a copy of the application to the company's registered office by registered post or speed post forthwith, and in practice the proof of dispatch goes on record with the petition. Serve the directors by email too, so that the company cannot later claim it was unaware.

5. File electronically and remove defects

   Petitions are filed on the NCLT e-filing portal with the prescribed fee, and a hard copy is often required as well. The registry scrutinises the papers and may raise defects; cure them quickly, because a petition does not reach the bench until the registry clears it.

6. Appear at the first hearing

   The bench usually issues notice to the company and lists the matter for its reply. Be ready to answer a dispute argument on the first date, with the documents flagged. If the company asks for time to settle, decide in advance what you will accept.

Since the 2026 amendment came into force, the NCLT must record reasons if it does not decide a section 9 application within 14 days. In practice, a contested petition still takes a few hearings, because the company is entitled to file a reply and the bench must look at the dispute argument. Uncontested petitions move faster.

Documents for a section 9 petition

Gather these before drafting. A missing ledger or an unsigned authority causes more adjournments than any legal point.

Which NCLT bench: Delhi, Noida, Ghaziabad or Gurugram?

The petition goes to the NCLT bench that has territorial jurisdiction over the registered office of the debtor company (section 60(1)), not the place where you supplied the goods or where your own office is. A company registered in Delhi is dealt with by the New Delhi benches of the NCLT. A company registered in Noida, Greater Noida or Ghaziabad falls under the bench for Uttar Pradesh, which sits at Prayagraj (Allahabad). A company registered in Gurugram falls under the bench for Haryana, which sits at Chandigarh.

Check the registered office on the MCA master data before you file, because many NCR companies operate from one city and are registered in another. A factory in Noida owned by a company registered in Delhi goes to New Delhi. A company that shifted its registered office from Delhi to another state shortly before default can raise jurisdiction arguments, so note the dates of any change. Our page on NCLT practice in Delhi describes how matters are listed and heard at the New Delhi benches.

What does the NCLT look at before admitting the petition?

Section 9(5) is a short list. The NCLT admits the application if it is complete, there is no payment of the unpaid operational debt, the invoice or notice was delivered, no notice of dispute was received and there is no record of dispute with an information utility, and no disciplinary proceeding is pending against the proposed resolution professional. If any condition fails, it rejects. Before rejecting for an incomplete application, it must give the creditor seven days to cure the defect.

The amendment that came into force on 26 May 2026 made admission of section 7 petitions mandatory once default is shown, removing the discretion the Supreme Court had read into that section. For section 9, the change is narrower: the 14-day timeline is reinforced by a requirement to record reasons for delay, and the list of grounds in section 9(5) continues to govern. The pre-existing dispute test from Mobilox remains the main battleground.

The amendment also replaced the old criminal offence in section 76, which punished an operational creditor for concealing a dispute or a settlement in a section 9 application, with a civil penalty that the NCLT can impose, reported to range from ₹1 lakh up to ₹2 crore. The practical message is unchanged: disclose the debtor's reply, any settlement and any complaint you know of. Hiding a dispute rarely works, because the company will produce it at the first hearing, and the consequences for the creditor are now direct.

The provisions you will rely on

What happens after a section 9 petition is admitted?

Admission starts the corporate insolvency resolution process. An interim resolution professional is appointed, a moratorium under section 14 stops suits, recovery proceedings and enforcement against the company, and the board of directors is suspended. The IRP makes a public announcement inviting claims from all creditors, including you. You must file your claim in the form prescribed for operational creditors, even though you started the process. Our posts on what the section 14 moratorium stops and filing your claim with the resolution professional cover these steps.

Operational creditors do not vote in the Committee of Creditors where financial creditors exist. Those whose dues together are at least 10% of the debt can attend meetings without a vote. A resolution plan must give operational creditors at least what they would receive in liquidation, which for unsecured suppliers is often modest. If no plan is approved within the time allowed, the company goes into liquidation, explained in our post on liquidation under the IBC.

If the petition is rejected, or admitted over your objection as the debtor, an appeal lies to the NCLAT within 30 days, extendable by 15 days for sufficient cause, under section 61. Our post on NCLAT appeals covers the timeline, including how the clock runs from the date the order is pronounced.

Can you settle after filing a section 9 petition?

Yes, and most section 9 petitions that end well for the creditor end this way. Before admission, the creditor can simply withdraw the application with the bench's leave under the NCLT rules, and no Committee of Creditors approval is needed. Settlement terms should be in writing, signed by both sides, with a clear payment schedule and a clause allowing you to revive proceedings or take other action if the company defaults on the settlement.

After admission, the process belongs to all creditors, not only to you. Withdrawal is then governed by section 12A, which needs approval of 90% of the voting share of the Committee of Creditors, and the 2026 amendment narrowed the window in which such a withdrawal can be made. A company that wants to settle should therefore do so before admission, and a creditor that is open to settlement should say so early. Our post on settling through section 12A withdrawal explains the post-admission route.

Mistakes that sink section 9 petitions

• Filing under the wrong section. An advance that was in substance a loan, or a guarantee claim, is not an operational debt, and a petition under section 9 will fail.
• Ignoring your own correspondence. Creditors often forget an old email in which the debtor complained about quality. The company's lawyer will not forget it.
• Miscounting the threshold. Including time-barred invoices, disputed invoices or speculative interest to cross ₹1 crore invites rejection.
• Defective service of the demand notice. Sending it to a branch office or a former address, or failing to keep tracking records, gives the company an easy objection.
• Filing before the 10 days have run. Count from the date of delivery, and wait for the full period.
• Concealing the reply or a settlement. The application must disclose the debtor's response and any settlement. Non-disclosure now carries a civil penalty and damages credibility with the bench.
• Using section 9 for a small, solvent customer. If the company is healthy and the dispute is about rates or quality, a commercial suit or arbitration is the better route.

Time and cost in general terms

The Code expects a decision within 14 days of filing, but the time between filing and admission depends on the bench's list, the registry's scrutiny and how hard the company contests. An uncontested petition can be admitted within weeks. A contested petition with a serious dispute argument may take several months. The demand notice and the 10-day wait add two to three weeks at the front end.

Costs fall into three parts: the filing fee prescribed under the 2016 Rules, the advocate's fees for the notice, petition and hearings, and, if the petition is admitted, the initial costs and fee of the interim resolution professional, which the applicant usually advances until the Committee of Creditors takes over. At B.K. Singh & Associates, fees are discussed at the first meeting and agreed in writing, stage by stage, and out-of-pocket costs are separate. The biggest saving comes from preparing the file properly once, rather than defending a rejected petition in appeal.

What to do this week if a company owes you ₹1 crore or more

Pull every invoice, delivery document and payment entry for the account and prepare a clean ledger with due dates. Search your email for the debtor's name and read every message from its people over the last two years. Pick out anything that admits the debt and anything that complains about the supply. Check the company's master data on the MCA portal for its registered office, directors and any charges, and note whether its registered office is in Delhi, Uttar Pradesh or Haryana.

Then decide the route. If the debt is clear and above ₹1 crore, a section 8 notice is usually the first step, and the petition follows if the company stays silent. If there are complaints on record, consider a summary suit, a commercial suit or arbitration instead. If you want an advocate to look at the file before you send anything, the team of Advocate B.K. Singh can review the papers and tell you which route fits; you can reach us through the online enquiry form or read more on the insolvency practice page.