Pre-existing dispute bars section 9 insolvency relief where contemporaneous correspondence and contractual compliance terms show a real dispute.

Additional documents could not be introduced for the first time at the appellate stage in support of a section 9 insolvency application because they had not been placed before the Adjudicating Authority and no leave had been sought below. A pre-existing dispute also barred admission of the petition: the work order required compliance with labour, PF, ESI and other statutory obligations, and contemporaneous correspondence showed ongoing disagreement over those compliance documents before the demand notice. Applying the settled test for a real and plausible dispute, the rejection of the section 9 application was upheld.

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Issues: (i) Whether additional documents could be received at the appellate stage in support of the section 9 application; (ii) Whether a pre-existing dispute existed so as to bar admission of the section 9 petition under the Insolvency and Bankruptcy Code, 2016.

Issue (i): Whether additional documents could be received at the appellate stage in support of the section 9 application.

Analysis: The record showed that the additional materials were not placed before the Adjudicating Authority and were not part of the section 9 application. The tribunal held that, unlike the position considered in relation to section 7 proceedings, the appellant had not sought leave before the Adjudicating Authority to introduce those materials and the appellate forum could not permit their first-time production in appeal in the circumstances of the case.

Conclusion: The request to rely on additional documents at the appellate stage was rejected.

Issue (ii): Whether a pre-existing dispute existed so as to bar admission of the section 9 petition under the Insolvency and Bankruptcy Code, 2016.

Analysis: The work order expressly required compliance with labour, PF, ESI and other statutory requirements as part of the contractual terms. The communications exchanged before the demand notice showed repeated insistence by the corporate debtor on submission of compliance documents and the operational creditor's refusal to treat such compliance as relevant to payment. Applying the settled test that the adjudicating authority must reject a section 9 application where there is a real and plausible dispute that is not spurious, hypothetical or illusory, the tribunal found that the dispute had arisen prior to the demand notice and was supported by record materials.

Conclusion: A pre-existing dispute was established and the section 9 application was correctly rejected.

Final Conclusion: The appeal failed, and the rejection of the insolvency application was upheld because the dispute pre-dated the demand notice and was not a mere moonshine defence.

Ratio Decidendi: A section 9 application must be rejected where the record shows a genuine pre-existing dispute supported by contemporaneous correspondence, and contractual compliance obligations can constitute a valid basis for such dispute when they form a pre-condition to payment.

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