Pre-existing dispute bar under insolvency law defeats Section 9 proceedings when operational debt is genuinely disputed.

An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was found not maintainable because the record showed a pre-existing dispute between the parties. Repeated objections regarding non-completion and alleged deficient performance under the work order, together with prior notices, invocation of arbitration, and appointment of a sole arbitrator, established that the dispute arose before the statutory demand notice. As the claim was not an undisputed operational debt, the existence of a real dispute attracted the bar under Section 9(5)(ii)(d), and the application was liable to be dismissed.

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Issues: Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable in view of a pre-existing dispute between the parties.

Analysis: The record showed repeated objections by the respondent regarding non-completion and alleged deficiency in performance under the work order, including prior notices, invocation of arbitration, and appointment of a sole arbitrator. The dispute was thus shown to have arisen before the statutory demand notice and was not a case of undisputed operational debt. In such circumstances, the existence of a real dispute attracted the bar under Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016.

Conclusion: The application was not maintainable and was liable to be dismissed.

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