Adjudicating Authority dismisses Section 9 application; Tribunal upholds decision. Appeal dismissed, Appellant can seek remedies.

The Adjudicating Authority dismissed the Section 9 application as the disputes raised by the Corporate Debtor were genuine and required further adjudication. The Tribunal upheld this decision, stating the defense was not illusory. The appeal was dismissed, allowing the Appellant to seek remedies elsewhere. No costs were awarded.

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Issues Involved:
1. Existence of an operational debt above the threshold limit.
2. Default in payment of the operational debt.
3. Existence of any pre-existing dispute between the parties.

Detailed Analysis:

1. Existence of an Operational Debt Above the Threshold Limit:
The core issue was whether an operational debt exceeding Rs. 1 lakh was due and payable. The Operational Creditor claimed Rs. 8,17,678.54 along with interest of Rs. 1,46,052/- from the Corporate Debtor. The Appellant supported their claim by highlighting that payments were received from the Corporate Debtor until 30.06.2019 and that reminders for clearing outstanding dues were sent periodically. Notably, the Corporate Debtor, in an email dated 21.05.2019, admitted its liability, stating that non-payment was due to a tough market situation, and promised to clear the dues soon.

2. Default in Payment of the Operational Debt:
The Adjudicating Authority examined whether the operational debt was due and payable and whether there was a default in payment. The Operational Creditor argued that the debt was acknowledged by the Corporate Debtor in their email dated 21.05.2019. However, the Corporate Debtor rebutted this, claiming the email was fraudulent and not sent by an authorized signatory. The Adjudicating Authority noted that the email was "unconventional" and lacked the name and designation of the authorized employee, raising doubts about its legitimacy.

3. Existence of Any Pre-Existing Dispute:
The most crucial issue was whether there was a pre-existing dispute between the parties. The Corporate Debtor argued that there were several pre-existing disputes regarding the quality of services provided by the Operational Creditor, communicated through emails from 2016 to 2019. These disputes included allegations of deficient services leading to theft and damage to property, and deployment of unethical security personnel. The Operational Creditor admitted some deficiencies in their emails dated 27.02.2016 and 29.08.2018.

The Adjudicating Authority found that the Corporate Debtor had raised genuine disputes regarding the services provided, which were communicated before the demand notice was issued. The Authority referred to the Supreme Court's judgment in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., emphasizing that the existence of a plausible contention requiring further investigation was sufficient to reject the application under Section 9 of IBC.

Conclusion:
The Adjudicating Authority concluded that the disputes raised by the Corporate Debtor were not spurious or plainly frivolous and required further adjudication by a competent court. Therefore, the Section 9 application was dismissed. The Tribunal affirmed this decision, stating that the Adjudicating Authority correctly applied the principles laid down in the Mobilox judgment and that the defense raised by the Corporate Debtor was not illusory or moonshine.

The appeal was dismissed, and the Tribunal clarified that the Appellant could seek remedies before any other appropriate forum in accordance with the law. No order as to costs was made.

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