Allahabad Tribunal Admits Corporate Insolvency Plea Over Unpaid Dues

The Allahabad bench of the National Company Law Tribunal admitted an operational insolvency petition filed against Rasik Products for defaulting on payments amounting to ₹1.47 crore. The adjudicating authority dismissed the corporate debtor's contentions regarding limitation periods and alleged pre-existing quality disputes, ruling them insufficient to block the proceeding.

This ruling clarifies that operational debtors cannot evade insolvency by raising vague or unsubstantiated quality complaints after receiving default notices. Under the insolvency code, a pre-existing dispute must be genuine, raised prior to the demand notice, and supported by concrete evidence rather than being manufactured as an afterthought to obstruct debt recovery.

Operational creditors facing payment defaults should ensure their documentation is robust enough to counter spurious quality defense claims. Debtors must provide contemporaneous proof of disputes to protect themselves against insolvency admissions.