Pre-existing dispute must precede the demand notice; post-notice objections cannot defeat a Section 9 insolvency application.
A Section 9 Insolvency and Bankruptcy Code application is defeated only by a genuine pre-existing dispute, meaning a specific dispute relating to the same operational debt that existed before the demand notice; a dispute first raised in reply to the notice is treated as an afterthought. The analysis also confirms that, for limitation, only invoices within three years before filing may be counted, and if the surviving claim still exceeds the applicable minimum threshold, maintainability is not affected. On that reasoning, the rejection of the Section 9 application was considered unsustainable and insolvency admission was required.
Issues: (i) whether there was a pre-existing dispute so as to bar an application under Section 9 of the Insolvency and Bankruptcy Code, 2016; (ii) whether the claim was barred by limitation and whether the statutory minimum threshold for maintainability was satisfied.
Issue (i): whether there was a pre-existing dispute so as to bar an application under Section 9 of the Insolvency and Bankruptcy Code, 2016.
Analysis: The dispute relied upon by the respondent was raised only in the reply to the demand notice and not before receipt of the notice. The alleged set-off was unsupported by any prior invoice or contemporaneous assertion of a specific dispute regarding the same debt. For a dispute to defeat a Section 9 application, it must be pre-existing and relatable to the operational debt before the demand notice is issued. The post-notice assertions were treated as an afterthought and not a genuine pre-existing dispute.
Conclusion: The existence of a pre-existing dispute was not established, and the objection failed against the respondent.
Issue (ii): whether the claim was barred by limitation and whether the statutory minimum threshold for maintainability was satisfied.
Analysis: Only the invoices falling within three years prior to the filing of the application could be considered for limitation. On that basis, the remaining invoices within time still aggregated above the then-applicable minimum threshold under Section 4 of the Insolvency and Bankruptcy Code, 2016. The objection on limitation did not defeat maintainability, and the statutory threshold requirement was satisfied on the surviving claim.
Conclusion: The claim was not barred in a manner that rendered the application non-maintainable, and the threshold requirement stood satisfied against the respondent.
Final Conclusion: The rejection of the Section 9 application was unsustainable, and the matter required admission for commencement of insolvency proceedings.
Ratio Decidendi: A Section 9 application cannot be defeated by a dispute raised only after the demand notice; the dispute must be pre-existing, specific, and referable to the same operational debt, and the surviving claim must also satisfy the statutory threshold for maintainability.
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