Pre-existing dispute under insolvency law requires credible prior record; liability acknowledgements sustained admission of the Section 9 claim.

Operational debt and default were found to be established where communications, including WhatsApp messages, contained clear acknowledgements of liability and repeated assurances to pay, even after the demand notice. The alleged objection regarding quality of goods and material test certificates was not accepted as a genuine pre-existing dispute because no timely protest was raised before utilisation of the goods and the record did not show a credible dispute existing before notice. On that basis, the Section 9 application was held maintainable, the rejection order was set aside, and the matter was directed to proceed under the insolvency resolution framework with appointment of an Interim Resolution Professional.

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Issues: Whether the Operational Creditor established default and absence of a pre-existing dispute so as to warrant admission of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The Tribunal found that the WhatsApp and other communications exchanged between the parties contained clear acknowledgements of liability and repeated assurances to pay, including after the demand notice. The alleged dispute regarding quality of goods and Material Test Certificates was not treated as a substantiated pre-existing dispute, since no timely objection had been raised before the goods were utilised and the record did not show a credible dispute existing before the demand notice. On that basis, the rejection of the Section 9 application was held to be contrary to the material on record.

Conclusion: The existence of an operational debt and default was established, the defence of pre-existing dispute failed, and the application under Section 9 was held maintainable and allowed.

Final Conclusion: The impugned order was set aside and the matter was directed to proceed in accordance with the insolvency resolution framework, including appointment of an Interim Resolution Professional.

Ratio Decidendi: An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 cannot be rejected on the basis of an alleged dispute unless a real and pre-existing dispute, supported by credible material and arising before the demand notice, is shown on record; admissions of liability and subsequent assurances to pay may establish default.

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