Pre-existing dispute under insolvency law barred the Section 9 application where service-quality objections predated the demand notice.

A Section 9 application under the Insolvency and Bankruptcy Code is maintainable only where operational debt remains unpaid, a demand notice has been served, and no pre-existing dispute is shown. Here, repeated correspondence and earlier replies from the corporate debtor had already raised objections about inferior service quality and alleged loss before the demand notice and the insolvency application. Those objections related to the existence of debt and the quality of services, and the tribunal found they were not spurious, feeble, hypothetical, or illusory. A pre-existing dispute was therefore established, and the Section 9 application was held not maintainable.

---

---

Issues: Whether there was a pre-existing dispute within the meaning of the Insolvency and Bankruptcy Code, 2016, so as to render the application under Section 9 not maintainable.

Analysis: The application for initiation of corporate insolvency resolution process could be admitted only if the operational debt was unpaid, the demand notice had been served, and no notice of dispute or record of dispute existed. A dispute under Section 5(6) includes questions relating to the existence of debt and the quality of services. The record showed repeated correspondence and earlier replies from the corporate debtor raising objections about inferior quality of service and asserting loss suffered on that account. Those objections were raised before the later demand notice and before the present application. On the material placed, the dispute was not shown to be spurious, feeble, hypothetical, or illusory, and the tribunal could not enter into a detailed factual investigation in Section 9 proceedings.

Conclusion: The issue was answered in the affirmative. A pre-existing dispute existed, and the Section 9 application was not maintainable.

---