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The threshold governs whether the IBC is available at all. A corporate insolvency petition requires a default of at least one crore rupees, which puts the process out of reach for most ordinary trade debts and pushes them toward summary suits, Commercial Court claims, or Section 138 prosecutions instead. Where the threshold is met, a financial creditor proceeds under Section 7 and an operational creditor under Section 9, after a statutory demand notice and in the absence of a pre-existing dispute.

For operational creditors the pre-existing dispute point is decisive. If the debtor raised a genuine dispute about the debt before the demand notice — over quality, quantity, or a counterclaim — the petition will not be admitted, and the IBC cannot be used as a substitute for a recovery suit. Creditors therefore need to be candid about the correspondence trail before filing, because a rejected petition costs time and hands the debtor a useful precedent.

Admission changes everything for the debtor. A moratorium halts suits and enforcement, the board is displaced and control passes to a resolution professional, and the promoter may be barred under Section 29A from bidding for the company. That combination is why the credible threat of admission produces so many settlements, and why Section 12A withdrawal after admission is common. Appeals from the Hyderabad Bench go to the NCLAT's Chennai Bench.