Pre-existing dispute and settlement discharge can defeat summary insolvency claims when liability remains contractually contested.

The dissenting view held that a real pre-existing dispute, reflected in prior correspondence over work completion, withheld amounts and alleged defects, barred invocation of summary insolvency relief. It further found that the settlement arrangement had discharged the corporate debtor on payment of the agreed sum, while any later claims were directed to another entity. On that construction, the alleged assignment or transfer of dues and the later memorandum of understanding raised contested contractual questions unsuitable for determination in a section 9 proceeding, so the petition was not maintainable and admission would have been set aside.

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Issues: Whether there was a pre-existing dispute before issuance of the demand notice; whether a debtor-creditor relationship existed between the operational creditor and the corporate debtor; whether the section 9 petition was maintainable in view of the settlement agreement and subsequent assignment or transfer of dues.

Analysis: The dissenting opinion held that correspondence preceding the demand notice showed a live dispute regarding completion of work, withholding of amounts, and alleged defects, and that these matters raised a plausible contention requiring investigation rather than a spurious defence. It further held that the settlement arrangement, on the construction adopted in dissent, discharged the corporate debtor upon payment of the agreed amount and that later claims were directed to another entity. The dissent also reasoned that the asserted assignment or transfer of dues and the validity of the later memorandum of understanding gave rise to disputed questions that could not be conclusively determined in summary insolvency proceedings.

Conclusion: On the dissenting view, a pre-existing dispute existed, no enforceable debtor-creditor relationship survived against the corporate debtor, and the section 9 petition was not maintainable.

Final Conclusion: The dissent would have set aside admission of the insolvency petition and treated the matter as one not fit for admission under the summary insolvency process.

Ratio Decidendi: Where the record discloses a real and pre-existing dispute supported by correspondence and contractual terms, and the claimed liability itself depends on contested factual and contractual questions, a section 9 insolvency petition is not maintainable.

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