IBC Dispute Threshold

In a decisive reaffirmation of IBC jurisprudence, the Supreme Court draws a clear boundary between debt recovery and insolvency resolution.

The Court held that where credible disputes exist prior to the demand notice, insolvency cannot be triggered, even if the debt appears substantial. Importantly, it emphasized that adjudicating authorities must not examine the merits of the dispute but only its existence and plausibility.

By restoring the NCLT’s order and setting aside the NCLAT ruling, the Court reinforces that the IBC cannot be misused as a pressure mechanism for recovery, especially in cases involving quality disputes, reconciliation issues, and accounting inconsistencies.