Operational debt, no pre-existing dispute, and limitation within time justified admission of the insolvency application.

Operational debt and default were found established on the basis of invoices and a ledger showing a running account with unpaid dues, so the section 9 insolvency application was fit for admission. No genuine pre-existing dispute was shown because the corporate debtor's objections were limited to accounting and reconciliation issues raised after the demand notice, which were not treated as a prior dispute under the Code. The claim was also held to be within limitation because the application was filed within three years of the last payment on the running account under Article 137 of the Limitation Act, 1963. Corporate insolvency resolution process was directed to commence, an interim resolution professional was appointed, and moratorium consequences followed.

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Issues: (i) whether the operational creditor established a debt and default warranting admission of the application under section 9 of the Insolvency and Bankruptcy Code, 2016; (ii) whether the corporate debtor showed any pre-existing dispute sufficient to defeat the petition; and (iii) whether the application was barred by limitation.

Issue (i): whether the operational creditor established a debt and default warranting admission of the application under section 9 of the Insolvency and Bankruptcy Code, 2016

Analysis: The invoices and ledger relied upon showed a running business account between the parties and recorded unpaid operational dues. The adjudicating authority found that the invoices were raised in the corporate debtor's name, the debt was reflected in the ledger, and the operational creditor had established non-payment of the operational debt.

Conclusion: The issue was decided in favour of the operational creditor, and the application was found fit for admission.

Issue (ii): whether the corporate debtor showed any pre-existing dispute sufficient to defeat the petition

Analysis: The reply to the demand notice was held to raise only questions about accounting of certain payments and reconciliation of accounts. No cogent material was produced to show a dispute existing prior to the demand notice. The alleged objections were treated as post-notice contentions and not as a real pre-existing dispute within the meaning of the Code.

Conclusion: The issue was decided against the corporate debtor, and no pre-existing dispute was found.

Issue (iii): whether the application was barred by limitation

Analysis: The application was filed within three years of the last payment on the running account. On the facts recorded, the authority held that the claim remained within the limitation period under Article 137 of the Limitation Act, 1963.

Conclusion: The issue was decided in favour of the operational creditor, and the application was held to be within limitation.

Final Conclusion: The corporate insolvency resolution process was directed to commence, an interim resolution professional was appointed, and moratorium consequences were made applicable under the Code.

Ratio Decidendi: In an application under section 9 of the Insolvency and Bankruptcy Code, 2016, admission is warranted where operational debt and default are established, no genuine pre-existing dispute is shown before the demand notice, and the claim is within limitation under Article 137 of the Limitation Act, 1963.

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