Operational debt and pre-existing dispute bar Section 9 insolvency where space-use charges lack an accepted payment basis.

Charges for use of airport retail space, described in correspondence as monthly rental, were held not to constitute operational debt under the Insolvency and Bankruptcy Code, 2016 because the asserted MMG payment basis lacked mutual acceptance and an enforceable commercial foundation. The record also showed repeated disputes over the basis and quantum of liability, including requests for sales details and negotiations to resolve commercials, establishing a pre-existing dispute between the parties. As insolvency proceedings cannot be used as a debt recovery mechanism in the presence of such dispute, the Section 9 petition was not maintainable and the application for corporate insolvency resolution failed.

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Issues: (i) Whether the amount claimed by the operational creditor constituted an operational debt under the Insolvency and Bankruptcy Code, 2016, and (ii) whether the petition under Section 9 was maintainable in view of the dispute between the parties.

Issue (i): Whether the amount claimed by the operational creditor constituted an operational debt under the Insolvency and Bankruptcy Code, 2016.

Analysis: The claim arose from an arrangement for use of airport retail space, and the correspondence between the parties described the amounts as monthly rental. The agreement did not bear the respondent's acceptance on the crucial payment annexure, and the right to payment on the asserted MMG basis was not shown to arise from a mutually accepted and enforceable commercial understanding. Since providing space on rent does not amount to a claim in respect of goods or services, the demand did not fall within the statutory definition of operational debt.

Conclusion: The claim was not an operational debt, and this issue is against the petitioner.

Issue (ii): Whether the petition under Section 9 was maintainable in view of the dispute between the parties.

Analysis: The record showed repeated exchanges disputing the basis of payment, requests for sales details, a meeting to resolve commercials, and the respondent's consistent denial of liability under the MMG model. The materials disclosed a pre-existing dispute as to the foundation and quantum of the claim. In such circumstances, the insolvency process could not be used as a substitute for debt recovery, and the statutory conditions for admission under Section 9 were not satisfied.

Conclusion: The petition was not maintainable under Section 9, and this issue is against the petitioner.

Final Conclusion: The application for initiation of corporate insolvency resolution process failed because the claimed amount did not qualify as operational debt and the parties were already in dispute on the basis of liability.

Ratio Decidendi: A claim for rent or similar space-use charges, unsupported by an accepted contractual basis for payment and arising amidst a prior dispute, does not satisfy the statutory requirements for an operational debt under Section 9 of the Insolvency and Bankruptcy Code, 2016.

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