Operational debt requires supply of goods or services; municipal recovery rules did not convert the toll claim, and pre-existing dispute barred section 9.

A contractual claim for toll and ECC collection charges recoverable as arrears of tax under a municipal statute did not, by that recovery mechanism alone, become an operational debt under the Insolvency and Bankruptcy Code because the petitioner was not supplying goods or services to the corporate debtor. The Tribunal also found multiple prior proceedings, correspondence, and contested claims showing a real and plausible pre-existing dispute, so the section 9 petition was not maintainable. The application was therefore rejected because the underlying claim was not an operational debt and the dispute was substantial.

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Issues: (i) Whether the claim arising from the toll collection arrangement constituted an operational debt under the Insolvency and Bankruptcy Code, 2016; (ii) Whether the existence of prior disputes between the parties barred admission of the petition under section 9.

Issue (i): Whether the claim arising from the toll collection arrangement constituted an operational debt under the Insolvency and Bankruptcy Code, 2016.

Analysis: The claim arose from a contract under which the corporate debtor was appointed to collect toll and ECC charges. The Tribunal held that the petitioner was not supplying goods or services to the corporate debtor. It further held that dues recoverable as arrears of tax under the municipal law are not the same as tax dues arising under law for the purposes of section 5(21) of the Code. The deeming and recovery mechanism under the municipal statute did not convert the contractual liability into an operational debt payable under law to a local authority.

Conclusion: The claim did not qualify as an operational debt and this issue was decided against the petitioner.

Issue (ii): Whether the existence of prior disputes between the parties barred admission of the petition under section 9.

Analysis: The record showed multiple writ petitions, appeals, interim orders, correspondence, and contested claims between the parties. Applying the settled test for section 9 admission, the Tribunal found that there was a real and plausible dispute requiring further adjudication and that the dispute was not a mere bluster or feeble defence.

Conclusion: The petition was barred by pre-existing disputes and this issue was decided against the petitioner.

Final Conclusion: The application under section 9 was not maintainable because the underlying claim was not an operational debt and the dispute between the parties was pre-existing and substantial.

Ratio Decidendi: A contractual liability recoverable as arrears of tax under a municipal statute does not, by that recovery mechanism alone, become an operational debt under section 5(21) of the Code, and a section 9 application must be rejected where a genuine pre-existing dispute exists.

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