Section 9 insolvency claim fails where advocate fee basis is unproved and a pre-existing dispute is on record.
An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 cannot be admitted where the claimed operational debt is not supported by any written agreement or convincing documentary basis, and the record shows a pre-existing dispute over the fee claim. The Tribunal found that standing counsel appointment letters and scattered bills did not establish a percentage-based fee structure, and the corporate debtor had consistently disputed the basis of payment. It also held that High Court fee rules for advocates do not automatically apply to tribunal proceedings, though they may offer guidance.
Issues: (i) Whether there was any agreement or documentary evidence to prove the fee structure claimed by the operational creditor; (ii) Whether there was a pre-existing dispute regarding the advocate's fee claim; (iii) Whether the fee structure under the High Court Rules regarding fees payable to advocates applied to an original application before a tribunal.
Issue (i): Whether there was any agreement or documentary evidence to prove the fee structure claimed by the operational creditor.
Analysis: The only material on record was the appointment as standing counsel and scattered fee claims raised during the period of engagement. No written agreement fixing a percentage-based fee structure was produced, and the later letters asserting such a claim were not shown to have been accepted by the corporate debtor. The prior bills and payments also did not support the present claim of a percentage fee.
Conclusion: The issue was answered against the operational creditor.
Issue (ii): Whether there was a pre-existing dispute regarding the advocate's fee claim.
Analysis: The correspondence showed that the corporate debtor disputed the fee basis and maintained that only the amount already paid was payable. A mere failure to reply to the demand notice did not extinguish the right to raise the plea of dispute at the admission stage. The materials disclosed a genuine difference over the fee structure and entitlement.
Conclusion: The issue was answered against the operational creditor.
Issue (iii): Whether the fee structure under the High Court Rules regarding fees payable to advocates applied to an original application before a tribunal.
Analysis: The Tribunal relied on authority distinguishing courts from tribunals and held that the High Court fee rules governing suits in courts do not automatically bind proceedings before tribunals. Those rules could at best serve as guidance, not as a binding fee regime for tribunal proceedings.
Conclusion: The issue was answered against the operational creditor.
Final Conclusion: As the applicant failed to establish a contractual or documentary basis for the claimed fee, and the record disclosed a pre-existing dispute, the insolvency application could not be admitted under the Code.
Ratio Decidendi: An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 cannot be admitted where the operational debt is not supported by an agreed or duly evidenced basis and a pre-existing dispute on the claim is shown on the record.
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