Acknowledged debt and absence of pre-existing dispute justified admission of the insolvency application despite warranty complaints.

An application under section 9 of the Insolvency and Bankruptcy Code was considered maintainable where correspondence showed the corporate debtor had acknowledged liability and stated a balance payable. Earlier complaints about warranty failures and defects did not, on the materials before the tribunal, establish a pre-existing dispute over the admitted balance before the demand notice. As the outstanding amount crossed the statutory threshold, the insolvency application was fit for admission, and rejection of the section 9 application was found unsustainable; the matter was remitted for admission after notice to the respondent.

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Issues: Whether the application under section 9 of the Insolvency and Bankruptcy Code, 2016 was liable to be rejected on the ground of dispute regarding the quantum of debt, or whether the debt admitted in correspondence remained outstanding so as to warrant admission of the insolvency application.

Analysis: The correspondence showed that the corporate debtor had acknowledged liability and had stated a balance payable amount of Rs. 75,97,141. The existence of earlier allegations regarding warranty failures and defects did not, on the materials before the Court, establish a dispute over this admitted balance prior to the demand notice. Since the outstanding amount was above the statutory threshold, the application was fit for admission.

Conclusion: The rejection of the section 9 application was unsustainable and the matter was remitted for admission of the application after notice to the respondent.

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