Existence Of Proceedings Under MSMED Act Or S.138 NI Act Doesn't Amount To Pre-Existing Dispute U/S 9 Of IBC: NCLT Mumbai

NCLT Mumbai held that the existence of proceedings under the MSMED (Micro, Small and Medium Enterprises Development) Act or Section 138 of the Negotiable Instruments (NI) Act does not automatically constitute a pre-existing dispute under Section 9 of the IBC (Insolvency and Bankruptcy Code). This ruling clarifies that for the purpose of initiating corporate insolvency resolution process, the dispute must be a genuine and independent one, not merely the subject matter of other legal proceedings. This interpretation aims to prevent the IBC from being used as a tool for debt recovery when other specific legal avenues are available.