Tribunal overturns Authority's decision, allows application under Insolvency Code Section 9, emphasizes pre-existing disputes.

The Tribunal set aside the Adjudicating Authority's rejection of an application under Section 9 of the Insolvency and Bankruptcy Code, citing the 'existence of dispute'. The Respondent's disputes raised post the Demand Notice were deemed not 'pre-existing disputes'. The case was remitted back to the Authority for admission of the application, providing the Corporate Debtor an opportunity to settle the claim before admission.

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Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 rejected on the ground of 'existence of dispute'.

Analysis:
The Appellant, an Operational Creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code against the Corporate Debtor. The Adjudicating Authority rejected the application citing the 'existence of dispute'. The Appellant provided evidence of 'debt' and 'default', including a Demand Notice issued under Section 8(1) of the I&B Code on 8th August, 2017. The Respondent filed a reply to the Demand Notice on 8th September, 2017, raising various disputes regarding defective services provided by the Appellant. However, the Respondent failed to produce any correspondence showing that prior to the Section 8 notice, they had intimated about the defective services.

The Tribunal highlighted that if a dispute is raised after the issuance of the Demand Notice under Section 8(1) of the I&B Code, it cannot be considered a 'pre-existing dispute'. The Adjudicating Authority failed to consider this crucial point and incorrectly concluded that the 'debt' in question was not only a serious dispute but also barred by limitation and laches. The Authority did not discuss the provisions under which the 'Master Service Agreement' with another entity was issued, and the reply to the Demand Notice was provided.

In light of the above, the Tribunal set aside the impugned order and remitted the case back to the Adjudicating Authority for admitting the application under Section 9 of the I&B Code after giving notice to the Corporate Debtor. The Corporate Debtor was given the opportunity to settle the claim before admission if they chose to do so. The appeal was allowed with the mentioned observations and directions.

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