### Transferred Winding-Up Petitions Converted to IBC Applications Must Independently Satisfy the Statutory Threshold of One Crore Rupees

The Operational Creditor (R-1) supplied goods to the Corporate Debtor (CD) starting in 2002.

In 2004, the CD confirmed an outstanding debt of ₹7,62,500.

R-1 subsequently filed a Winding Up Petition (C.P. No. 240/2004) under the Companies Act, 1956.

The High Court of Gujarat admitted the petition in 2006 and directed the CD to deposit ₹4.5 Lakhs, which remains in court custody.

Following the Supreme Court’s mandate in Action Ispat, the High Court transferred the proceedings to the NCLT in 2021.

R-1 then filed Form-5 to convert the petition into a Section 9 application under the IBC, claiming a total of ₹4,43,14,429 by applying 24% compound interest.

The NCLT admitted the application on 13.01.2026, holding that the ₹1 Lakh threshold applied and that the CD's defense was "moonshine".

The Appellant challenged this admission.

The Court applied Section 4 of the IBC, which increased the minimum default threshold to ₹1 Crore via notification dated 24.03.2020.

It relied on the 5th proviso to Section 434(1)(c) of the Companies Act, 2013, and the Companies (Transfer of Pending Proceedings) Rules, 2016, which dictate that transferred proceedings must be dealt with as fresh applications under the IBC.

The Court followed Action Ispat and Power Pvt. Ltd. v. Shyam Metalics, establishing that IBC proceedings are independent of winding-up stages.

The Court followed A. Navinchandra Steels (P) Ltd. v. Srei Equipment Finance Ltd., establishing that IBC proceedings are independent of winding-up stages.

Regarding interest, the Court applied principles from Rishabh Infra v. Sadbhav Engineering, ruling that unilateral interest clauses in invoices do not constitute a contractual debt unless accepted by the debtor.

Regarding interest, the Court applied principles from Comet Performance Chemicals v. Aarvee Denims, ruling that unilateral interest clauses in invoices do not constitute a contractual debt unless accepted by the debtor.

The Court reasoned that transfer to NCLT does not mean "mechanical" admission; the Adjudicating Authority must judicially determine debt and default under IBC parameters.

Since the petition was converted to a Section 9 application in 2022—well after the March 2020 amendment—the mandatory threshold is ₹1 Crore.

On the merits of the debt, the Court found the principal amount was only ₹7,62,500.

It rejected the inclusion of ₹4.35 Crore in interest because there was no bilateral agreement or evidence of the CD ever paying such interest; a unilateral note on an invoice is insufficient to create a liability for the purpose of meeting the IBC threshold.

However, the Court rejected the "pre-existing dispute" plea, noting the CD had signed an account confirmation and failed to raise objections within the 48-hour window stipulated in the invoices.

The Court held that while the debt was not a "disputed" one, the interest could not be added to the principal to trigger insolvency proceedings.

Consequently, the appeal was allowed, and the Section 9 application was dismissed.

However, to balance equities, the Court directed the Appellant to pay R-1 the sum of ₹4.5 Lakhs with 12% compound interest from 04.04.2006 within 30 days, allowing the Appellant to withdraw the original deposit from the High Court Registry.