Pre-existing dispute under IBC must exist before demand notice; later challenge cannot block admission where default is otherwise proved.

For a section 9 application under the Insolvency and Bankruptcy Code, a pre-existing dispute must be shown to have existed before receipt of the demand notice; a dispute arising only after the notice or after filing cannot defeat admission. The text also states that where the claim is within the three-year limitation period, the debt meets the statutory threshold, default is documented, and liability is admitted in correspondence, the operational creditor's application satisfies the admission requirements. On that basis, the application was admitted, the corporate insolvency resolution process commenced, and moratorium followed.

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Issues: (i) Whether the corporate debtor had shown a pre-existing dispute so as to defeat admission of the section 9 application. (ii) Whether the claim was within limitation and otherwise satisfied the statutory threshold for admission under the Insolvency and Bankruptcy Code, 2016.

Issue (i): Whether the corporate debtor had shown a pre-existing dispute so as to defeat admission of the section 9 application.

Analysis: The dispute relied upon by the corporate debtor arose only after the demand notice and after the section 9 petition had been filed. The reply to the demand notice contained an admission of liability and a proposal to pay in instalments, and the later challenge to the arbitral award could not be treated as a dispute existing before receipt of the demand notice. On that basis, the record did not disclose a pre-existing dispute of the kind that would bar admission.

Conclusion: The existence of a pre-existing dispute was not established, and the objection was rejected.

Issue (ii): Whether the claim was within limitation and otherwise satisfied the statutory threshold for admission under the Insolvency and Bankruptcy Code, 2016.

Analysis: The claim was found to be within the three-year limitation period, the debt exceeded the minimum threshold prescribed for an operational creditor, and the documents showed default. The corporate debtor had also admitted liability in correspondence and before the Tribunal. In these circumstances, the statutory requirements for admission of the operational creditor's application were met, leading to commencement of the corporate insolvency resolution process and the consequential moratorium.

Conclusion: The application was admitted, corporate insolvency resolution process was initiated, and moratorium followed.

Final Conclusion: The order conclusively accepted the operational creditor's insolvency claim, rejected the maintainability objection, and brought the corporate debtor into insolvency resolution.

Ratio Decidendi: For a section 9 application, a dispute must be shown to have existed before receipt of the demand notice; a later challenge to the debt or award does not constitute a pre-existing dispute, and admission follows where default and statutory threshold are otherwise established.

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