Stamping of Invoices Does Not Mean Acceptance of Debt, Rules NCLAT

The National Company Law Appellate Tribunal (NCLAT), New Delhi, has recently clarified an important legal point: stamping an invoice doesn’t automatically mean a company agrees to pay the amount mentioned in it.

Case Overview

This decision came from a case involving Sadbhav Engineering Limited (Corporate Debtor) and Tirupati Drilling & Mining Services Private Limited (Operational Creditor).

Here’s a quick background:

• Sadbhav Engineering was hired by Uranium Corporation of India Ltd (UCIL) to operate at Banduhurang Opencast Mines.
• Sadbhav then gave a drilling contract to Tirupati Drilling.
• Although the work order was initially for one year, it got extended until March 31, 2020.

Despite reminders, Sadbhav Engineering did not pay Tirupati Drilling’s dues. Instead, they disputed the claims without proper reasons.

Legal Battle

• Tirupati Drilling issued a Demand Notice under Section 8 of the Insolvency and Bankruptcy Code (IBC).
• After no response, Tirupati filed a case under Sections 8 and 9 of the IBC to start insolvency proceedings.

However, the Adjudicating Authority (AA) rejected the application because there was a pre-existing dispute between the parties — and not a simple case of non-payment.

Arguments Raised

• Tirupati Drilling argued that Sadbhav’s objections were vague and false. They claimed that before sending the demand notice on December 31, 2021, there was no real dispute.
• On the other hand, Sadbhav Engineering maintained that they had been raising disputes about the payment amount well before the demand notice.

What the Tribunal Said

The NCLAT bench, including Justice Ashok Bhushan, Mr. Arun Baroka, and Mr. Barun Mitra, observed that:

• The dispute existed even before the demand notice.
• Stamping or acknowledging the receipt of an invoice does not mean accepting the debt.
• If there’s a real dispute over the amount, insolvency proceedings cannot be initiated under Section 9 of the IBC.

Thus, the Tribunal dismissed Tirupati Drilling’s appeal and supported the lower authority’s decision.

Key Takeaways for Businesses

• Stamping an invoice is just an acknowledgment of receiving it — not an acceptance of payment liability.
• Before starting insolvency proceedings, it’s crucial to ensure there is no genuine dispute about the amount due.
• Proper documentation and clear communication are critical to avoid legal complications.

Published on: April 28, 2025
Author: Team CS Chavi Goyal