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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the documentary evidence furnished with the application showed that the operational debt was due and payable and remained unpaid. (ii) Whether there existed a pre-existing dispute between the parties before receipt of the demand notice.
Issue (i): Whether the documentary evidence furnished with the application showed that the operational debt was due and payable and remained unpaid.
Analysis: For admission of an operational creditor's application under Section 9 of the Insolvency and Bankruptcy Code, 2016, the Adjudicating Authority must be satisfied that an operational debt exists, that the documentary material shows the debt is due and payable, and that it has not been paid. The record showed supply of goods, issuance of invoices, and part-payment by the corporate debtor, which supported the existence of liability and default.
Conclusion: The requirement of a due and payable unpaid operational debt was satisfied in favour of the petitioner.
Issue (ii): Whether there existed a pre-existing dispute between the parties before receipt of the demand notice.
Analysis: Under the settled law governing Section 9, the Adjudicating Authority is only to see whether there is a real dispute supported by material and whether it existed before the demand notice. The corporate debtor did not send any reply to the demand notice and did not place any prior record showing a dispute regarding quality or performance before receipt of the notice. The asserted defence was therefore not shown to be a genuine pre-existing dispute.
Conclusion: No pre-existing dispute barring admission of the petition was established, and this issue was decided in favour of the petitioner.
Final Conclusion: The operational creditor's application was admitted, moratorium was directed, and CIRP was initiated with appointment of an interim resolution professional.
Ratio Decidendi: An application by an operational creditor under Section 9 must be admitted when the record shows an unpaid operational debt and no genuine pre-existing dispute existed before the demand notice.
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