FTF Pharma: NCLAT finds Rs 2.18 crore claim disputed

FTF Pharma’s Rs 2.18 crore claim could not support insolvency proceedings because the National Company Law Appellate Tribunal found documented disputes over all three invoices before the October 2024 demand notice. The tribunal relied on correspondence from July 2023 to August 2024 concerning testing costs, stability data, milestone conditions and out-of-specification results.

Why did NCLAT reject the insolvency application against FTF Pharma?

The National Company Law Appellate Tribunal (NCLAT) held that the Section 9 insolvency application against FTF Pharma had to be rejected because a plausible dispute existed before the demand notice. Under Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016, the Adjudicating Authority must reject an application when a notice of dispute has been received.

NCLAT recorded that the Section 8 demand notice was sent on 23 October 2024 and that FTF Pharma replied on 31 October 2024, within 10 days, disputing each invoice. It also found that emails dated 21 July 2023, 26 December 2023, 17 January 2024, 6 August 2024 and 9 August 2024 demonstrated that the disagreement had begun before the demand notice.

The National Company Law Tribunal, Ahmedabad, had admitted the Section 9 application on 9 September 2026 and begun the corporate insolvency resolution process (CIRP). NCLAT held that the earlier forum had erred by recording pre-existing disputes but admitting the case because it considered those disputes insufficiently significant.

What made up the Rs 2.18 crore claim against FTF Pharma?

The Rs 2.18 crore claim comprised one invoice of Rs 20.38 lakh for third-party laboratory testing and two invoices of Rs 98.83 lakh each for stability-data milestones. All three invoices arose under a Technology Transfer Agreement dated 4 May 2022.

Invoice IMSER/22-23/0089, dated 22 February 2023, sought Rs 20.38 lakh for third-party laboratory testing charges. FTF Pharma contended that such charges were outside the operational creditor’s work under Clauses 4.3 and 4.7 of the agreement. NCLAT noted that emails dated 21 July 2023 and 26 December 2023 disputed that invoice by name and number.

The other invoices, IMSER/24-25/0006 and IMSER/24-25/0007, were dated 9 April 2024 and sought Rs 98.83 lakh each. They related respectively to the second milestone for three-month stability data and the third milestone for six-month stability data. FTF Pharma disputed whether payment conditions were met, citing late, incomplete or missing data and concerns over out-of-specification (OOS) results.

What does a pre-existing dispute mean under Section 9?

A pre-existing dispute is a real and plausible disagreement supported by material before the demand notice, rather than a defence that must be proved at the insolvency-admission stage. NCLAT said correspondence generated during performance of a contract, including emails, letters and WhatsApp messages, can establish a dispute without a prior suit, arbitration or formal notice.

The tribunal applied the Supreme Court standard in Mobilox Innovations Private Limited v. Kirusa Software Private Limited. The test is whether the contention requires further investigation and is not spurious, hypothetical, illusory or unsupported. NCLAT said that this threshold is lower than the preponderance-of-probability standard used by a civil court when deciding a claim after evidence.

That distinction applied to the two Rs 98.83 lakh milestone invoices. The earlier order referred to the absence of liquidated damages for delay in the agreement, but NCLAT held that FTF Pharma was not seeking delay damages. Its case was that contractual conditions for the milestone payments had not been met, raising a dispute about whether the alleged debt was due.

How did NCLAT assess FTF Pharma’s emails and payment discussions?

NCLAT found that FTF Pharma’s 2023 and 2024 emails contested every component of the Rs 2.18 crore claim before the 23 October 2024 demand notice. It also stated that Immacule Lifesciences Private Limited, the operational creditor, had not produced an email, certificate or other document showing that FTF Pharma accepted the claimed amounts.

The tribunal rejected the view that a 26 December 2023 email showed an admission of liability. That email offered to consider payment after product approval and referred to an amicable settlement, but it also stated that testing was the operational creditor’s responsibility and that six-month data had not been received. NCLAT held that a settlement proposal linked to a future event did not remove the documented dispute.

NCLAT also rejected the earlier finding that the two milestone invoices, together worth Rs 1.98 crore, exceeded the statutory threshold even if the Rs 20.38 lakh testing invoice was disputed. The tribunal said this reasoning assumed the milestone invoices were undisputed, despite the emails of 26 December 2023, 17 January 2024, 6 August 2024 and 9 August 2024 questioning the performance underlying them.

What did NCLAT decide about the CIRP and the parties’ settlement?

NCLAT held that the CIRP initiated through the 9 September 2026 admission order could not stand and directed that FTF Pharma be restored to its management immediately. It also held that the interim resolution professional (IRP) must be relieved, because the Section 9 application was liable to rejection under Section 9(5)(ii)(d).

The tribunal said an insolvency admission has immediate consequences because management is displaced, a moratorium applies and the company’s affairs pass to a professional. It therefore said the Section 9 inquiry cannot decide contractual merits such as delayed stability data, OOS investigations, milestone completion or responsibility for third-party testing costs.

Immacule Lifesciences told NCLAT that its disputes and claims with FTF Pharma had been resolved and that it did not wish to contest the appeal. Its authorised signatory filed an affidavit following NCLAT’s 22 September 2026 order, referring to Company Petition CP IB No. 346 of 2026 and the 9 September 2026 CIRP admission order.

Conclusion

The ruling means the Rs 2.18 crore claim could not be used to place FTF Pharma into CIRP because the record showed a plausible, documented contractual dispute before the demand notice. The finding covered the Rs 20.38 lakh laboratory-testing invoice and both Rs 98.83 lakh stability-data milestone invoices, rather than treating the disagreement as a dispute over delay alone.

The next matter to watch is implementation of NCLAT’s direction to restore FTF Pharma’s management and relieve the IRP. The source also records that Immacule Lifesciences said all disputes and claims had been resolved, while NCLAT identified arbitration or a civil suit as the ordinary forums for any contractual issue requiring evidence and interpretation of the agreement.