Pre-existing dispute defeats insolvency admission where operational debt is genuinely contested and not clearly unpaid.

An application under Section 9 of the Insolvency and Bankruptcy Code is maintainable only when an operational debt is due, payable, unpaid, and not subject to a genuine pre-existing dispute. The Tribunal noted that the respondent had disputed the claim and produced ledger entries and payment advice, showing the debt was not free from dispute. It reiterated that insolvency proceedings cannot be used as a substitute for debt recovery. On that basis, the petition was held not maintainable and was dismissed, leaving the petitioner to pursue other available remedies.

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Issues: Whether the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable in view of the alleged pre-existing dispute and the respondent's claim of payment.

Analysis: The application under Section 9 is maintainable only where an operational debt is due and payable, remains unpaid, and is not shown to be subject to a genuine dispute existing prior to the demand notice. On the material placed before it, the Tribunal found that the respondent had disputed the claim, produced ledger entries and payment advice, and showed that the claim was not free from dispute. The Tribunal also reiterated that the insolvency process cannot be used as a substitute for debt recovery and that the existence of an undisputed debt is essential for admission.

Conclusion: The petition was not maintainable and was dismissed.

Final Conclusion: The insolvency commencement process was declined because the claim was found to be disputed rather than an undisputed operational debt, leaving the petitioner to pursue other available remedies.

Ratio Decidendi: An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 must be rejected where there is a genuine pre-existing dispute regarding the operational debt or the debt is otherwise shown to be disputed and not clearly unpaid.

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