Pre-existing dispute under insolvency law defeats a section 9 petition where dues and interest remain contested.

An application under the Insolvency and Bankruptcy Code was held to be barred by a pre-existing dispute where the record at the time of the demand notice already showed litigation over the arbitral award, section 34 and section 37 proceedings, execution, and computation of dues and interest. The dispute was not treated as a simple case of an undisputed unpaid operational debt because the award amount had been paid and the parties were still contesting the remaining liability and interest calculation. On those facts, the section 9 insolvency petition was rejected as not maintainable.

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Issues: Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable in view of a pre-existing dispute regarding calculation of dues and interest.

Analysis: The existence of a dispute for the purpose of Section 9 is to be seen from the record when the demand notice is issued. The parties had already been engaged in extensive litigation concerning the arbitral award, objections under Section 34, appellate proceedings under Section 37, execution proceedings, and the computation and adjustment of the amount payable, particularly interest. The materials showed that the award amount had been paid, while the dispute continued on the calculation of the remaining dues and interest. On these facts, the controversy was not a simple case of an undisputed unpaid operational debt.

Conclusion: The application under Section 9 was not maintainable because there was a pre-existing dispute, and rejection of the insolvency petition was justified.

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