An Indian company owes you ₹1 crore or more and will not pay? How foreign and Indian suppliers use a Section 8 demand notice and a Section 9 IBC application before the NCLT — and when it works.
Your company supplied goods, software or services to an Indian company. The invoices were accepted, part-payments stopped, and months of reminders have produced only promises. You are outside India, the amount is significant, and a civil suit in an Indian court sounds slow and uncertain.
For a clear, undisputed debt of ₹1 crore or more, Indian insolvency law gives creditors — including foreign creditors — a powerful option: asking the National Company Law Tribunal (NCLT) to put the defaulting company into insolvency. Handled correctly, the prospect of losing control of the company is often what brings the debtor to the table.
The Insolvency and Bankruptcy Code, 2016 route works best when:
If the company disputes the debt in good faith, arbitration or a suit is the better route, and an arbitral award can later support enforcement. See cross-border disputes and foreign award enforcement.
Before admission, the company's promoters still control it. Admission means a moratorium, a professional taking over management and a public insolvency process. That is why many debtors pay or propose a settlement after the demand notice or while the application is pending — and why the notice and application must be prepared carefully so that the company cannot easily manufacture a "pre-existing dispute".
The Supreme Court has repeatedly said that the Code is a resolution process, not a debt collection tool. Once a company is admitted, operational creditors are paid only through an approved resolution plan, often at a discount, and filing an application with a malicious or fraudulent purpose is punishable under Section 65. The route should be used where the debt is real and the company is not paying — not as a threat against a genuine commercial dispute.
A demand notice can be prepared and served within days. NCLT admission can take weeks to many months depending on the bench and on objections. A resolution process, once admitted, runs for months more. The earliest and cheapest leverage is usually a well-drafted demand notice.
Collect the paper trail — contract or purchase orders, invoices, delivery and acceptance records, statements of account and every email in which the company acknowledged the debt.
Check the numbers and dates — the principal in default, the default date, and whether the ₹1 crore threshold and three-year limit are met.
Get a preliminary case assessment of whether to use the IBC route, arbitration or a suit, and how to frame the demand notice. Enquiries from outside India can be handled entirely online.
Negotiation is the simplest form of dispute resolution — parties communicate directly to reach agreement without a neutral third party. Learn when negotiation works, when it doesn't, and how it relates to formal ADR.
Arbitration is a binding process where an arbitrator decides the dispute after hearing both sides, similar to a private court. Learn how it works, when it fits, and how awards are enforced in India.
Mediation is a voluntary, confidential process where a neutral third party helps disputing parties reach their own settlement. Learn how it works, when it applies, and what makes it binding.
Yes. A foreign supplier of goods or services is an operational creditor under Section 5(20) of the Insolvency and Bankruptcy Code, 2016, and the Supreme Court held in Macquarie Bank v. Shilpi Cable Technologies (2017) that a foreign creditor need not produce a certificate from an Indian bank under Section 9(3)(c) and may serve the demand notice through its lawyer.
Source: Insolvency and Bankruptcy Code, 2016, Sections 5(20), 8 and 9
The default must be at least ₹1 crore; the Central Government raised the threshold under Section 4 of the Insolvency and Bankruptcy Code, 2016 from ₹1 lakh to ₹1 crore by notification dated 24 March 2020.
Source: Insolvency and Bankruptcy Code, 2016, Section 4; S.O. 1205(E) dated 24 March 2020
If the company shows a plausible dispute that existed before it received the demand notice, the NCLT will reject a Section 9 application; the Supreme Court held in Mobilox Innovations v. Kirusa Software (2017) that the Tribunal only checks whether a genuine pre-existing dispute exists, so the route suits clearly undisputed debts.
Source: Insolvency and Bankruptcy Code, 2016, Sections 8(2) and 9(5)
No. The Code is a resolution process, not a collection tool: once the NCLT admits the application, a moratorium under Section 14 stops other recovery, an interim resolution professional takes over management, and operational creditors are paid only under an approved resolution plan; filing with a malicious or fraudulent intent can attract a penalty of ₹1 lakh to ₹1 crore under Section 65.
Source: Insolvency and Bankruptcy Code, 2016, Sections 14, 17 and 65
Yes. Many companies pay or settle after receiving a Section 8 demand notice or before the NCLT admits the application; after admission, withdrawal is allowed under Section 12A of the Insolvency and Bankruptcy Code, 2016 only with the approval of 90% of the committee of creditors.
Source: Insolvency and Bankruptcy Code, 2016, Section 12A
An application under Section 9 is governed by Article 137 of the Limitation Act, 1963, so it must generally be filed within three years from the date of default, as the Supreme Court held in B.K. Educational Services v. Parag Gupta (2018).
Source: Insolvency and Bankruptcy Code, 2016, Section 238A; Limitation Act, 1963, Article 137
An arbitration clause does not by itself bar a Section 9 application for an undisputed debt, but a genuine dispute already referred to arbitration is a pre-existing dispute; a foreign arbitral award against the company can be enforced in India under Sections 48–49 of the Arbitration and Conciliation Act, 1996.
Source: Arbitration and Conciliation Act, 1996, Sections 48–49
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General information only — not legal advice.
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