Operational debt, valid demand notice, and no pre-existing dispute justified admission of the insolvency application and moratorium.

Proof of unpaid operational debt and default under the Insolvency and Bankruptcy Code was established through acknowledged invoices, delivery challans, and the corporate debtor's books of account, so the section 9 requirements on debt and default were satisfied. Valid service of the demand notice was accepted because it was delivered at the registered address and supported by the acknowledgment card and annual report address; no documentary material showed any pre-existing dispute over the transactions or amounts due. As the application was complete and within threshold, it was admitted, the proposed interim resolution professional was appointed, and moratorium under section 14 was declared.

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Issues: (i) whether the operational creditor established an operational debt and default to sustain an application under section 9 of the Insolvency and Bankruptcy Code, 2016; (ii) whether the demand notice was duly served and whether any dispute was shown to exist prior to the notice; and (iii) whether the application deserved admission with consequential commencement of corporate insolvency resolution process and moratorium.

Issue (i): whether the operational creditor established an operational debt and default to sustain an application under section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The invoices and delivery challans were found to be acknowledged by the corporate debtor through its stamp. The running account and books of account showed an outstanding principal sum due. The Tribunal treated the unpaid amount as an operational debt within the meaning of the Code and held that non-payment of the due amount constituted default. The claim for interest was noticed with reference to section 16 of the Micro, Small and Medium Enterprises Development Act, 2006, but the finding rested on the principal liability and default.

Conclusion: The existence of operational debt and default was proved in favour of the petitioner.

Issue (ii): whether the demand notice was duly served and whether any dispute was shown to exist prior to the notice.

Analysis: The Tribunal accepted service of the demand notice at the corporate debtor's registered address, supported by the acknowledgment card and the annual report address. It also found that no documentary material was produced to show any pre-existing dispute regarding the transactions, invoices, or amount payable. The objection as to non-service and fabricated invoices was rejected.

Conclusion: The demand notice was duly served and no pre-existing dispute was established.

Issue (iii): whether the application deserved admission with consequential commencement of corporate insolvency resolution process and moratorium.

Analysis: Since the statutory requirements for admission under section 9 were satisfied, the application was found complete and within the threshold. The Tribunal accordingly appointed the proposed interim resolution professional, directed public announcement, and declared moratorium under section 14 with the usual prohibitions and protections under the Code.

Conclusion: The application was admitted and the corporate insolvency resolution process was directed to commence.

Final Conclusion: The petitioner's claim succeeded on proof of operational debt and default, resulting in admission of the insolvency application and commencement of CIRP with moratorium and ancillary directions.

Ratio Decidendi: Proof of unpaid operational debt, absence of a pre-existing dispute, and valid service of the demand notice are sufficient to admit a section 9 application and trigger CIRP with moratorium under the Code.

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