Pre-existing dispute defeats section 9 insolvency petition where warranty objections preceded the demand notice.

A section 9 Insolvency and Bankruptcy Code petition was held not maintainable where the corporate debtor had raised a genuine pre-existing dispute over warranty obligations before the demand notice. The debtor's repeated communications from 2015 onwards objecting to the absence of the manufacturer's warranty, and requiring the defect to be cured or the goods rejected, were treated as sufficient evidence of a real dispute. The existence of a pending money recovery suit on the same subject matter further confirmed that the debt was disputed. On that basis, insolvency resolution could not be invoked merely on the asserted operational debt.

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Issues: Whether a petition under section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable when the corporate debtor had raised a pre-existing dispute regarding warranty obligations before the demand notice and the filing of the petition.

Analysis: The record showed that the corporate debtor had, from 2015 onwards, repeatedly objected to the absence of manufacturer's warranty and had called upon the operational creditor to cure that deficiency or face rejection of the goods. Those communications preceded the statutory demand notice and were sufficient to show a real dispute between the parties. The existence of a pending money recovery suit on the same subject matter further supported the conclusion that the claim was disputed. In these circumstances, the petition could not be admitted for insolvency resolution merely on the basis of the asserted debt.

Conclusion: The petition under section 9 was not maintainable and was dismissed because a pre-existing dispute existed between the parties.

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