Filing a Section 9 application under the Insolvency and Bankruptcy Code, 2016 (IBC)

 

Filing a Section 9 application under the Insolvency and Bankruptcy Code, 2016 (IBC) involves a specific procedure that must be followed carefully. This section is used by an Operational Creditor to initiate a Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor. Here's a step-by-step breakdown of the practical aspects involved in making such an application before the National Company Law Tribunal (NCLT):

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✅ Step-by-Step Procedure for Filing Section 9 Application

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Step 1: Determine Eligibility

• Who can file?: Only an Operational Creditor.

• Minimum default amount: ₹1,00,00,000 (as per the latest threshold set by the Ministry of Corporate Affairs).

• Nature of debt: Must be an “operational debt” (e.g., supply of goods or services, employment dues, etc.)

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Step 2: Issue a Demand Notice (Form 3 or 4)

• Section 8(1) of the IBC mandates that before filing under Section 9, the operational creditor must serve a demand notice to the corporate debtor demanding payment of the operational debt.

Forms:

• Form 3: Simple demand notice.

• Form 4: If attaching an invoice demanding payment.

Mode of Service:

• Must be served via registered post, speed post, courier with tracking, hand delivery, or email (if accepted communication mode).

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Step 3: Wait for 10 Days

• The corporate debtor has 10 days from the receipt of the demand notice to either:

  • Repay the debt, or

  • Send a reply with a notice of dispute (if there is a genuine dispute regarding the debt).

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Step 4: Prepare the Application (Form 5)

If no payment or valid dispute is received within 10 days, the creditor can proceed to file an application before the NCLT under Section 9, using Form 5.

Documents to attach with Form 5:

1. Copy of demand notice (Form 3 or 4) and proof of service.

2. Invoices, purchase orders, delivery challans, etc., proving the debt.

3. Bank statement or financial records showing non-payment.

4. Affidavit under Section 9(3)(b) confirming that no notice of dispute was received.

5. Certificate from financial institution (if available) confirming non-payment.

6. Authorization letter/Board resolution (if application is being filed by someone other than the sole proprietor/partner/director).

7. Court fee: Pay the applicable NCLT filing fee (₹2,000 currently for operational creditor applications).

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Step 5: File the Application Before NCLT

• Submit the application electronically via the MCA21 portal and also physically (where required) to the relevant bench of the NCLT having jurisdiction over the corporate debtor’s registered office.

• Application must be served to the corporate debtor and Insolvency and Bankruptcy Board of India (IBBI).

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Step 6: Admission or Rejection by NCLT

• The NCLT will verify:

  • Whether debt is due and payable.

  • Whether there is any pre-existing dispute.

  • Completeness of the application.

If satisfied:

• NCLT admits the petition and declares moratorium (under Section 14), and appoints an Interim Resolution Professional (IRP).

If not:

• NCLT rejects the application, citing reasons.

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🧾 Key Legal Requirements and Pitfalls to Avoid

Issue	Guidance
Pre-existing dispute	Even if the debtor shows evidence of a genuine dispute before the demand notice, the application can be rejected.
Defective notice/service	Failure to serve the demand notice properly may result in dismissal.
Limitation	Application must be filed within 3 years from the date of default.
Proprietorship filing	File in the name of the sole proprietor, not the trade name. Attach Aadhaar/PAN to prove identity.
False claim	Filing a false claim may attract penalties under Section 75 of IBC.

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📌 Practical Tips for Drafting and Filing

• Use precise documentation: Ensure invoices, communications, and bank records are clear.

• Legal vetting: Consider engaging an IBC-experienced lawyer or Insolvency Professional.

• Maintain service proof: Keep courier receipts, email delivery reports, etc.

• Avoid casual or poorly drafted demand notices: Courts have dismissed cases for vague notices.

• Use a standard format for Form 5 and include all annexures, numbered and indexed properly.