NCLT orders on disputed debt create ambiguity for insolvency professionals

Two different verdicts left ambiguity on how the term 'dispute' was to be interpreted

Two judgments by the National Company Law Tribunal (NCLT), Mumbai, have left insolvency professionals confused as to what constitutes disputed debt. 

In one case, the NCLT, Mumbai, ruled that a debt would be taken as disputed only if a suit was filed in court before insolvency proceedings were initiated. In another case, it recognised a debt as disputed even without a case being filed in a court.

Essar Projects, an operational creditor, moved the NCLT against MCL Global Steel. The debtor challenged the insolvency proceedings on the ground that the amount of debt was disputed. 

The tribunal upheld the petition for insolvency, observing