Section 9 IBC claim reconciliation led to deferral of CIRP and directions for claim consideration

A Section 9 IBC petition was not taken to CIRP because the operational creditor's services were not disputed, but the invoices, limitation and pre-existing dispute objections, and the need for reconciliation meant the claim required further consideration. The Tribunal treated the proceedings as summary in nature and declined to decide disputed factual issues at that stage. Noting that the corporate debtor was a financially stable going concern and that immediate insolvency action could have serious civil consequences, it directed the creditor to file the claim with supporting evidence, required the debtor to consider it and issue a speaking order, and left liberty to file a fresh petition if aggrieved.

---

---

Issues: Whether the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, should result in commencement of CIRP or be disposed of by directing the parties to reconcile and resolve the claim.

Analysis: The services rendered by the operational creditor were not denied, though the corporate debtor disputed the invoices, raised limitation and pre-existing dispute objections, and stated that accounts required reconciliation. The proceedings under the Code are summary in nature and disputed questions of fact are not to be fully tried therein. At the same time, the Tribunal noted that the debtor was a financially stable going concern and that immediate initiation of CIRP could have serious civil consequences. Balancing these aspects, the Tribunal declined to commence CIRP at that stage and instead directed the operational creditor to submit its claim with supporting evidence, requiring the corporate debtor to consider it and pass a speaking order.

Conclusion: CIRP was not initiated; the petition was disposed of with directions for claim submission, consideration by the corporate debtor, and liberty to file a fresh petition in accordance with law if aggrieved.

Final Conclusion: The dispute was not finally adjudicated on insolvency commencement, and the matter was left to be dealt with first through reconciliation and consideration of the claim outside immediate CIRP.

Ratio Decidendi: A Section 9 petition may be deferred where the claim requires reconciliation and the Tribunal, exercising its summary jurisdiction, considers immediate insolvency commencement inappropriate in the circumstances.

---