Pre-existing dispute defeats section 9 insolvency claim where rent default and lease compliance remain genuinely contested.

A section 9 insolvency application based on alleged unpaid lease rent was held not maintainable because a genuine pre-existing dispute existed over the lessor's contractual and statutory compliance, including approvals, occupancy certificate and permissions for commercial use. The dispute had been raised before the demand notice and was supported by allegations that the building lacked necessary permissions, with related criminal proceedings also pending. In summary proceedings, the tribunal would not decide contested questions of fact or law where entitlement itself was disputed, and the creditor failed to show an undisputed default. The application was dismissed.

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Issues: Whether the section 9 application seeking initiation of corporate insolvency resolution process was maintainable in the presence of a prior dispute regarding the lease arrangement and alleged rent default.

Analysis: The application was founded on alleged unpaid rent under a lease deed. The record showed that the corporate debtor had raised earlier and substantial objections regarding the lessor's compliance with contractual obligations, including approvals, occupancy certificate and other statutory permissions for commercial use of the premises. The dispute was raised before the statutory demand notice and was supported by allegations that the building lacked necessary permissions and that related criminal proceedings were pending. In such summary proceedings, the adjudicating authority would not enter disputed questions of fact or law where the very entitlement to claim the amount was contested. The creditor also failed to establish, with supporting material, that the claim for rent was free from dispute or that the contractual defaults alleged against it had been addressed.

Conclusion: The section 9 application was not maintainable and was dismissed.

Ratio Decidendi: A section 9 insolvency application cannot be admitted where a genuine pre-existing dispute exists regarding the underlying operational claim and the creditor has not shown an undisputed default.

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