Operational debt and pre-existing dispute test: invoice records and payment trail supported admission of the insolvency application.

An operational creditor established a legally enforceable operational debt by showing invoices raised to the corporate debtor, part payments made by it, and TDS and GST entries linked to the transaction. Those records supported privity of contract and a liability payable by the corporate debtor. The corporate debtor failed to show any real, bona fide pre-existing dispute capable of defeating the insolvency claim, as the asserted dispute was not substantiated on the record. On that basis, the section 9 application was correctly admitted and the appeal was dismissed.

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Issues: Whether the admission of the section 9 application was justified on the ground that the operational creditor had proved an operational debt due from the corporate debtor and that no genuine pre-existing dispute existed.

Analysis: The invoices and payment trail showed that the tax invoice was raised in favour of the corporate debtor, the part payments were made by it, and TDS as well as GST were reflected against the transaction. On the record, the relationship of supplier and recipient was between the operational creditor and the corporate debtor, which established privity of contract and a legally enforceable liability. The material placed by the corporate debtor did not disclose any real dispute capable of defeating the insolvency claim; the alleged dispute was not shown to be bona fide or substantiated.

Conclusion: The operational creditor was rightly treated as such, the debt was held to be operational debt due and payable, and the section 9 application was correctly admitted. The appeal was therefore dismissed.

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