Operational debt and default were proved by documents, an arbitral award, and settlement; section 34 challenge did not bar CIRP admission.

Documentary acknowledgments of supply, an arbitral award crystallising liability, and a later compromise settlement admitting the debt established operational debt and default for admission under section 9 of the Insolvency and Bankruptcy Code, 2016. The pending section 34 challenge did not, by itself, keep a live dispute alive where the settlement terms showed admitted liability and continued non-payment. The petition was treated as one for commencement of CIRP, not recovery of money, and the statutory requirements for admission under section 9(5) were satisfied. CIRP was therefore directed to be initiated against the corporate debtor.

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Issues: Whether the operational creditor established debt and default so as to warrant admission of the petition under section 9 of the Insolvency and Bankruptcy Code, 2016, and whether the pending section 34 challenge to the arbitral award or the compromise settlement defeated such admission.

Analysis: The claim was supported by supply documents, acknowledgments of receipt, an arbitral award crystallising the liability, and a subsequent compromise settlement in which the corporate debtor acknowledged the debt and defaulted in payment. The later filing of a section 34 petition was not treated as preserving a live dispute because the settlement terms evidenced an admitted liability and continuing default. The petition was also not one for recovery of money but for commencement of CIRP on the basis of an operational debt and default. On these facts, the statutory requirements for admission under section 9(5) were satisfied.

Conclusion: The petition was held admissible and CIRP was directed to be initiated against the corporate debtor under section 9(5) of the Insolvency and Bankruptcy Code, 2016.

Ratio Decidendi: Where the operational debt is supported by documentary acknowledgment, an arbitral award, and a subsequent settlement admitting liability, a later section 34 challenge does not by itself negate debt and default for the purpose of admission under section 9 of the Insolvency and Bankruptcy Code, 2016.

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