Pre-existing dispute and specific authorisation bar section 9 insolvency applications where prior contractual already existed.

A section 9 insolvency application is not maintainable where a real pre-existing dispute existed before the demand notice, including disputes over contract performance, bills, retention money, bank guarantees, or alleged defects already reflected in prior proceedings. In addition, initiation of corporate insolvency proceedings requires specific authority to present the petition; a general board authorisation to sign and verify documents is insufficient where it does not expressly empower the signatory to commence the insolvency process. The application therefore failed on both maintainability and authorisation grounds.

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Issues: (i) Whether the section 9 application was maintainable in view of a pre-existing dispute between the parties; (ii) Whether the petition was validly presented by a duly authorised signatory.

Issue (i): Whether the section 9 application was maintainable in view of a pre-existing dispute between the parties.

Analysis: A section 9 application can be admitted only when the requirements of the Insolvency and Bankruptcy Code, 2016 are satisfied and there is no real dispute existing before service of the demand notice. Here, the record showed that disputes concerning the contract, running account bills, retention monies, bank guarantees, and alleged defects had already arisen and were the subject of arbitration-related steps before the insolvency notice was issued. The existence of prior proceedings and the factual matrix demonstrated that the controversy was not created by the demand notice but had pre-existed it.

Conclusion: The application was not maintainable because there was a pre-existing dispute.

Issue (ii): Whether the petition was validly presented by a duly authorised signatory.

Analysis: Initiation of corporate insolvency proceedings requires proper authority to present the application. The board resolution relied upon authorised the signatory to sign and verify documents generally, but did not specifically authorise him to initiate the corporate insolvency resolution process. In the absence of such specific authority, the presentation of the petition was defective.

Conclusion: The petition was not validly presented for want of specific authorisation.

Final Conclusion: The insolvency application failed on maintainability and authority grounds, so the request to commence insolvency proceedings could not be entertained.

Ratio Decidendi: A section 9 insolvency application cannot be admitted where a pre-existing dispute existed before the demand notice, and initiation of insolvency proceedings requires specific authorisation to present the petition.

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