Pre-existing dispute defeats section 9 insolvency claim where payment controversy arose before demand notice.

A section 9 application under the Insolvency and Bankruptcy Code was treated as not maintainable because a pre-existing dispute existed over the claimed operational debt. Correspondence and meetings between the parties concerning the pending tax liability and settlement of dues showed that the controversy arose before the demand notice. Applying the principle that a real and plausible dispute is enough to bar admission, and that the adjudicating authority does not assess the merits of the underlying claim at this stage, the claimed amount could not be regarded as an admitted operational debt.

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Issues: Whether the section 9 application was maintainable in the face of a pre-existing dispute between the parties concerning the claimed operational debt.

Analysis: The application under section 9 of the Insolvency and Bankruptcy Code, 2016 was examined in light of the statutory requirement that, before admission, the adjudicating authority must be satisfied that no dispute exists regarding the debt or its default. The record showed correspondence and meetings between the parties concerning pending tax liability and settlement of the dues, and these materials demonstrated that the controversy over payment had arisen before the demand notice. Applying the settled principle that the existence of a real and plausible dispute is sufficient to defeat admission and that the adjudicating authority does not at this stage determine the merits of the underlying claim, the claimed amount could not be treated as an admitted operational debt.

Conclusion: The application was not maintainable because a pre-existing dispute existed between the parties.

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