Pre-existing dispute over debt quantum barred insolvency admission and led to dismissal of the section 7 petition.

A section 7 insolvency petition was held not maintainable because a real pre-existing dispute existed over the quantum of debt and related transactions. The corporate debtor disputed the creditor's computation, asserted that substantial payments had been made through connected entities, and relied on pending civil and recovery proceedings concerning the same property and allied dealings. Those materials showed the dispute arose before filing of the insolvency application, attracting the statutory bar to admission where debt is genuinely disputed. The petition was dismissed.

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Issues: Whether the section 7 application was liable to be rejected on the ground that a pre-existing dispute existed regarding the quantum of debt and related transactions.

Analysis: The financial creditor claimed an outstanding amount, while the corporate debtor contested the computation and asserted that substantial payments had been made through connected entities. The materials also showed pending civil and recovery proceedings concerning the same property and allied transactions. On these facts, the dispute was found to have arisen before the filing of the insolvency petition, which attracted the statutory bar to admission where a real dispute exists as to the debt.

Conclusion: The section 7 petition was not maintainable and was dismissed because of the pre-existing dispute.

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