Pre-existing dispute defeats section 9 insolvency action where prior correspondence showed a plausible, serious contention.

A real pre-existing dispute barred the operational creditor's section 9 IBC application because correspondence before the demand notice had already raised objections on liability for double rent, an alleged oral assurance extending the arrangement, and the applicability of section 24 of the Maharashtra Rent Control Act, 1999. Applying the test that the adjudicating authority need only see whether there is a plausible contention requiring further investigation, the tribunal found the defence was not illusory or spurious. It also noted that the statutory provision relied on applied to residential premises, while the premises were commercial, making the claim seriously disputable.

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Issues: Whether a pre-existing dispute existed between the parties before issuance of the section 8 demand notice, and whether the operational creditor's application under section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable.

Analysis: The dispute had been raised through correspondence much before the demand notice, including objections regarding liability for double rent, the alleged oral assurance for extension, and the applicability of section 24 of the Maharashtra Rent Control Act, 1999. Applying the principle that the adjudicating authority must see only whether there is a plausible contention requiring further investigation and not a patently feeble or spurious defence, the authority found that the respondent's stand was not illusory. It also noted that section 24 of the Maharashtra Rent Control Act, 1999 applies to residential premises, while the premises in question were commercial, making the contractual and statutory claim itself seriously disputable.

Conclusion: A real and serious pre-existing dispute existed, so the section 9 application was not maintainable.

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