Operational debt and pre-existing dispute test: Section 9 insolvency application admitted after default was established and dispute lacked supporting material.

An operational creditor's Section 9 application under the Insolvency and Bankruptcy Code was maintainable because default was proved through unpaid invoices and ledger entries, while the corporate debtor's notice of dispute did not show any pre-existing dispute before the demand notice. On that basis, the Tribunal found that the debt was operational and the default was established. The application was therefore admitted, corporate insolvency resolution proceedings were initiated, moratorium was declared, and an interim resolution professional was appointed to perform duties under the Code.

---

---

Issues: (i) Whether the operational creditor established an operational debt and default despite the corporate debtor's denial and alleged dispute; (ii) Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was liable to be admitted and consequential insolvency proceedings, moratorium, and appointment of an interim resolution professional were warranted.

Issue (i): Whether the operational creditor established an operational debt and default despite the corporate debtor's denial and alleged dispute.

Analysis: The notice of dispute did not annex material showing any dispute existing prior to the demand notice, and it did not explain why the claim was not an operational debt. The materials on record, including the unpaid invoices and ledger, supported non-payment of the admitted services dues.

Conclusion: The existence of operational debt and default was established in favour of the operational creditor.

Issue (ii): Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was liable to be admitted and consequential insolvency proceedings, moratorium, and appointment of an interim resolution professional were warranted.

Analysis: Once default was established and the statutory requirements were found satisfied, the application was fit for admission. Consequential initiation of the corporate insolvency resolution process followed, together with declaration of moratorium and appointment of an interim resolution professional to carry out the duties under the Code.

Conclusion: The application was admitted, the corporate insolvency resolution process was initiated, moratorium was declared, and an interim resolution professional was appointed.

Final Conclusion: The petition succeeded and the corporate debtor was brought under insolvency resolution proceedings with the statutory moratorium in force.

Ratio Decidendi: A Section 9 application is admissible where the operational creditor establishes default and the alleged dispute is not supported by material showing a pre-existing dispute before issuance of the demand notice.

---