Operational debt and default under the Insolvency Code led to admission, moratorium, and CIRP initiation.

An application under Section 9 of the Insolvency and Bankruptcy Code was found maintainable and within limitation because it was based on recent invoices, a demand notice had been issued and received, and the filing satisfied the applicable threshold. Operational debt and default were proved through invoices, account statements and the demand notice, while the corporate debtor's admissions and business difficulties did not establish any pre-existing dispute. On that basis, the petition was admitted, the corporate insolvency resolution process was initiated, moratorium under Section 14 was ordered, public announcement was directed, and an interim resolution professional was appointed.

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Issues: (i) whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable and within limitation; (ii) whether operational debt and default were established and any pre-existing dispute barred admission; and (iii) whether the corporate insolvency resolution process should be initiated with consequential moratorium and appointment of an interim resolution professional.

Issue (i): whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was maintainable and within limitation.

Analysis: The application was filed after issuance and receipt of demand notice and related to invoices of a recent period. The adjudicating authority recorded that, on the date of filing, it had jurisdiction to entertain applications above the then-applicable threshold and that the invoices fell within limitation.

Conclusion: The application was maintainable and within limitation.

Issue (ii): whether operational debt and default were established and any pre-existing dispute barred admission.

Analysis: The record included invoices, statement of accounts, and the demand notice under Sections 8 and 9. The corporate debtor admitted liability, while disputing interest and asserting business difficulties and an alleged extension of credit period. The authority found that debt and default stood proved and no pre-existing dispute was shown to defeat the petition.

Conclusion: Operational debt and default were proved and the petition was not barred by any pre-existing dispute.

Issue (iii): whether the corporate insolvency resolution process should be initiated with consequential moratorium and appointment of an interim resolution professional.

Analysis: Once debt and default were found established, the application was admitted. The authority declared moratorium under Section 14, directed public announcement under Section 15, and appointed an interim resolution professional for conduct of the insolvency process.

Conclusion: The corporate insolvency resolution process was initiated, moratorium was ordered, and an interim resolution professional was appointed.

Final Conclusion: The petition was admitted, resulting in commencement of insolvency proceedings against the corporate debtor along with statutory moratorium and all incidental directions required for the resolution process.

Ratio Decidendi: An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 is admissible where operational debt and default are established, no pre-existing dispute is shown, and the statutory requirements for admission are satisfied, upon which CIRP and moratorium follow.

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