Pre-existing dispute defeats section 9 insolvency petition where prior complaints questioned debt and goods quality.

A section 9 IBC petition was found not maintainable where the corporate debtor showed that part of the invoice demand had already been paid and the rental claim was not supported by the parties' statements as an outstanding liability. Prior e-mails sent before the demand notice repeatedly raised complaints about crane failures, wire rope issues, trolley roller defects, safety concerns and other quality problems. Those communications established a genuine pre-existing dispute on the existence of the debt and the quality of goods, bringing the matter within section 5(6) of the Insolvency and Bankruptcy Code, 2016. The application was therefore liable to be rejected.

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Issues: Whether the petition under section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable in view of a pre-existing dispute regarding the existence of the debt and the quality of goods supplied.

Analysis: The claim was examined invoice-wise and the payment records relied upon by the corporate debtor showed that the invoices forming the first part of the demand had already been paid. For the rental component, the statements produced by the parties did not establish any subsisting outstanding amount. More importantly, the record contained e-mails exchanged before the demand notice raising repeated complaints about crane failures, wire rope issues, trolley roller defects, safety concerns and other quality-related problems. Those communications constituted a dispute within the meaning of section 5(6) of the Insolvency and Bankruptcy Code, 2016, particularly as to the existence of the debt and the quality of goods.

Conclusion: The petition was not maintainable because a genuine pre-existing dispute existed, and the application under section 9 was liable to be rejected.

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