Appellate Tribunal overturns dismissal of Section 9 Application due to lack of evidence, emphasizes dispute resolution attempts.

The Appellate Tribunal found the Adjudicating Authority's dismissal of the Section 9 Application erroneous due to insufficient evidence of a pre-existing dispute. The Tribunal directed the matter back to the Adjudicating Authority for further review, emphasizing the Respondent's continuous acknowledgments of outstanding dues. Parties were instructed to attempt dispute resolution before the Application could proceed, with the possibility of the Adjudicating Authority admitting the Application if no settlement was reached. The Appeal was allowed without costs awarded.

---

---

Issues:
- Appellant's claim as Operational Creditor against Impugned Order dated 11th January, 2019 passed by Adjudicating Authority.
- Dispute over outstanding dues, interest, and liability to pay under the Insolvency and Bankruptcy Code, 2016 (IBC).
- Respondent's counterclaim against the Appellant regarding financial obligations and old outstanding amounts.
- Continuous acknowledgments of dues by the Respondent through letters.
- Adjudicating Authority's error in dismissing the Section 9 Application based on the existence of a pre-existing dispute.

Analysis:
1. The Appellant filed an Appeal as an Operational Creditor against an Order passed by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. The dispute revolved around the Respondent's alleged failure to fulfill business arrangements related to manufacturing India Made Foreign Liquor (IMFL) and supplying Extra Neutral Alcohol (ENA) to the Appellant. The Appellant claimed outstanding dues of Rs. 2,38,16,374, including interest, and sought recovery under Section 9 of the IBC.

2. The Appellant contended that despite the Respondent disputing the interest component, the total outstanding dues exceeded Rs. 1 Lakh. The Respondent's responses, including a suit for arbitration, were cited as acknowledgment of the liability. The Appellant highlighted various correspondences and the Respondent's admission of liability, both in written replies and financial statements, to support the claim.

3. In response, the Respondent argued that there was no provision for interest in the Agreement and disputed the characterization of advances as debt payable. The Respondent counterclaimed that the Appellant failed to meet guaranteed offtake, leading to financial difficulties. The Respondent also contended that the amounts claimed were old and not actionable under the IBC.

4. The Appellant presented evidence of continuous acknowledgments of dues by the Respondent through letters, indicating a clear admission of liability. Despite the Respondent's attempts to contest certain aspects, the consistent acknowledgment of outstanding amounts, even in financial statements, supported the Appellant's claim.

5. The Appellate Tribunal found the Adjudicating Authority's dismissal of the Section 9 Application erroneous, emphasizing the need to assess the existence of a pre-existing dispute at the time of issuing the Section 8 Notice. The Tribunal concluded that the Respondent's acknowledgments and lack of evidence of a communicated dispute before the Notice warranted setting aside the Impugned Order and remitting the matter back to the Adjudicating Authority for further consideration.

6. The Tribunal directed the parties to appear before the Adjudicating Authority for potential dispute resolution before the Section 9 Application could proceed. If no settlement occurred, the Adjudicating Authority was instructed to admit the Application and issue necessary orders under the IBC. The Appeal was allowed, and no costs were awarded in the disposition of the case.

---