Section 9 IBC or Order 37 Summary Suit: Which Is Faster for Recovering Unpaid Invoices From a Company?

A private limited company owes your business ₹1.4 crore on supply invoices from last year. It has stopped answering emails, and the finance manager who kept promising payment “next week” has left. One adviser tells you to file for insolvency against the company because “they’ll pay the moment NCLT issues notice.” Your lawyer suggests a summary suit under Order XXXVII of the Code of Civil Procedure instead.

Both routes can get you paid. They work very differently, though, and the amendments to the Insolvency and Bankruptcy Code that took effect on 26 May 2026 have changed how an insolvency petition plays out for a supplier.

The short answer: against a solvent company with a clean, documented debt, a summary suit usually ends in a decree you can enforce, while a Section 9 petition usually works as pressure. Which one puts money in your account sooner depends on three things: the size of the claim, whether the company ever disputed it, and whether the company can actually pay.

How a Section 9 IBC Application Works

A business that supplied goods or services and has not been paid is an operational creditor under the IBC. Section 9 lets it ask the National Company Law Tribunal (NCLT) to start the corporate insolvency resolution process (CIRP) against the debtor company.

The steps:

1. Check the threshold. The default must be at least ₹1 crore. Count the principal carefully. The NCLAT has refused to let a creditor add interest to the claim just to cross that line.
2. Send a demand notice under Section 8. The company then has 10 days to pay or to point out an existing dispute. A Section 9 application filed before those 10 days run out is not maintainable.
3. File with an information utility. Since 26 May 2026, Section 215(3) requires an operational creditor to submit financial information about the debt to an information utility before filing under Section 9. This used to be optional.
4. File Form 5 before the NCLT. For a company registered in Delhi, that means the NCLT benches in New Delhi.
5. Admission or rejection. The NCLT must decide within 14 days. Under the new proviso to Section 9(5), if it does not, it has to record its reasons in writing.

Once the application is admitted, a moratorium under Section 14 freezes every suit, execution and recovery action against the company. An interim resolution professional takes over its management, and you become one claimant among many, waiting for a resolution plan or liquidation.

How an Order 37 Summary Suit Works

A summary suit under Order XXXVII CPC is a civil suit for a fixed sum of money, usually one arising from a written contract. In it, the defendant has no automatic right to defend. It must ask the court for permission, called leave to defend.

The steps:

1. Pre-institution mediation. A commercial claim worth ₹3 lakh or more must first go through mediation under Section 12A of the Commercial Courts Act, unless you genuinely need urgent interim relief. If the company ignores the mediation notice, you get a non-starter report and can file.
2. File the plaint. It must state that the suit is filed under Order XXXVII. In Delhi, claims up to ₹2 crore go to the district commercial court. Larger claims go to the Commercial Division of the Delhi High Court.
3. Appearance. The company has 10 days from service of summons to enter appearance.
4. Summons for judgment. You then serve a summons for judgment, and the company has 10 days to apply for leave to defend.
5. Leave stage. If the company does not apply, or the court refuses leave, you get a decree straight away. If the court grants leave, conditionally or unconditionally, the suit goes to trial like an ordinary commercial suit.

The Supreme Court set out the test for leave in IDBI Trusteeship Services Ltd. v. Hubtown Ltd. (2017). A substantial defence earns unconditional leave. A defence that is plausible but doubtful can earn leave on conditions, such as depositing part of the claim. A frivolous or sham defence gets no leave at all. If the company admits part of the amount, it cannot defend at all until it deposits that admitted part in court.

Section 9 IBC vs Order 37: Side-by-Side Comparison

Which Route Is Faster in Practice?

Section 9: fast pressure, slow payment

On paper, the NCLT has 14 days to admit or reject. In practice, the Insolvency and Bankruptcy Board of India (IBBI) found in its own study that not a single Section 9 application had been admitted within 14 days. The 2026 amendment now makes the tribunal record reasons for any delay, but it does not add benches or members.

The real speed of Section 9 has always come before admission. A company facing an insolvency petition risks losing control of its business, so it often pays or settles once notice is issued. IBBI’s 2024 discussion paper recorded 21,466 Section 9 cases disposed of before admission, a large share of them through settlement. Before admission, you can still withdraw the application once the company pays.

After admission, the picture changes:

• You lose the settlement exit. Since 26 May 2026, Section 12A of the IBC bars withdrawal of an admitted application before the committee of creditors is constituted. Withdrawal is possible only after that, with 90% of the committee’s vote, and only until resolution plans are invited. The old practice of settling in the first few weeks after admission and withdrawing is no longer available.
• You rank low. Operational creditors sit behind secured financial creditors in any distribution and have no vote in the committee.
• Recoveries are partial and slow. As of 31 March 2026, creditors had recovered about 30.56% of admitted claims across all resolved cases, and processes that ended in an approved plan took an average of 621 days.

So Section 9 is fast only if the company pays to stop the petition. If it does not, and the NCLT admits the case, a supplier can wait years for a fraction of its invoice.

Order 37: slower start, real decree

A summary suit takes longer to get going. Mediation under Section 12A can run up to three months, extendable by two more if both sides agree, unless the company simply fails to turn up. Service of summons and the two 10-day windows add more time.

The speed comes at the leave stage. If the company has no real defence, the court can pass a decree on the leave application itself, without written statements, issues or evidence. That decree carries interest and can be executed by attaching the company’s bank accounts, receivables and assets. If the company is moving assets to defeat a future decree, you can also ask for attachment before judgment under Order XXXVIII Rule 5 CPC.

The risk is a defence that earns unconditional leave. The suit then becomes a regular commercial suit, and that takes considerably longer.

When a Section 9 Application Makes Sense

Section 9 is worth considering when all of these are true:

• The unpaid principal is ₹1 crore or more and is within limitation.
• The company has never questioned the supplies or the amount in writing before your demand notice. That means no quality complaints, no requests to reconcile accounts and no debit notes.
• The company is a going concern that will not want to lose control of its business.
• You can accept the outcome if the petition is admitted and you end up as a low-ranking claimant.

The pre-existing dispute test is where most Section 9 applications fail. In GLS Films Industries Pvt. Ltd. v. Chemical Suppliers India Pvt. Ltd. (decided 9 April 2026), the Supreme Court restored the NCLT’s rejection of a supplier’s ₹2.9 crore application. The company had complained about defective supplies, the ledgers did not match, and interest debit notes had been raised late, all before the demand notice. The Court held that the NCLT only checks whether a plausible dispute exists. It does not decide who is right.

The 2026 amendment raised the cost of getting this wrong. New Section 67C allows a penalty of ₹1 lakh to ₹2 crore on an operational creditor who hides a pre-existing dispute or a full and final settlement in its application.

When an Order 37 Summary Suit Is the Better Route

A summary suit is usually the stronger choice when:

• The claim is below ₹1 crore. Section 9 is not available at all.
• The company has raised some objection. A complaint that would sink a Section 9 application may still be too thin to earn unconditional leave to defend. The court looks at whether the defence is genuine, not just whether one was raised.
• You want to control the recovery. A decree belongs to you. You decide when to execute and against which assets.
• You want interest. A summary decree can carry interest on the principal. In insolvency, you are paid whatever the resolution plan offers.

One caution applies to both routes. If any creditor gets a CIRP admitted against the company, the moratorium stops your suit and any execution. Where a company is visibly in distress, moving fast to a decree and attaching assets matters.

Documents to Gather Before You Choose

The same papers decide both routes, so collect them first:

• The purchase order, contract or other written terms
• Invoices, delivery challans and e-way bills
• GST returns (GSTR-1) showing the invoices
• Your ledger and any balance confirmation signed by the company
• Emails or letters in which the company acknowledged the amount
• Every complaint or objection the company sent, with your replies

Both routes are generally subject to a three-year limitation period from the date of default. A written acknowledgment of the debt by the company, signed before limitation expires, starts a fresh period under Section 18 of the Limitation Act.

Talk to a Debt Recovery Lawyer in Delhi

Raizada Law Associates acts for businesses across Delhi NCR in money recovery suits, commercial summary suits and insolvency proceedings before the NCLT. We review your invoices and correspondence, check whether a Section 9 application would survive a pre-existing dispute objection, and advise on the route most likely to get you paid.