Disputed contractual dues cannot be recovered through insolvency proceedings when liability is contested and arbitration is provided.

Insolvency proceedings cannot be used to recover disputed contractual dues where liability is contested and requires evidentiary determination. The claimed amounts arose from execution and maintenance work, but the debtor did not admit liability and the contract provided for arbitration as the dispute-resolution mechanism. Because the claim depended on underlying contractual obligations and factual inquiry, the insolvency forum was not the proper venue for adjudication or recovery. The appellate tribunal therefore found no reason to interfere with the order rejecting the application, leaving the parties to pursue the dispute before the contractual or arbitral forum.

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Issues: Whether an application seeking recovery of contractual dues, where the liability is disputed and the contract provides for arbitration, is maintainable in insolvency proceedings; and whether the impugned order dismissing the application calls for interference in appeal.

Analysis: The claimed amounts arose out of a contractual arrangement for execution and maintenance work. The liability was not admitted and required determination of contested facts, evidence, and establishment of the underlying contractual obligations. The contract also contained an arbitration mechanism for resolution of disputes. Proceedings under the Insolvency and Bankruptcy Code are not intended to function as a recovery forum for disputed contractual claims, particularly where adjudication of liability depends on detailed factual inquiry and the parties have agreed to a separate dispute-resolution forum.

Conclusion: The application was not maintainable before the insolvency forum for recovery of disputed contractual dues, and the order rejecting it was in principle and required no interference; the appeal fails.

Final Conclusion: The dispute was left to be pursued before the appropriate contractual or arbitral forum, and the appellate challenge to the dismissal of the application was rejected.

Ratio Decidendi: Insolvency proceedings cannot be used as a substitute for adjudication and recovery of disputed contractual claims requiring evidentiary determination, especially where the contract provides an arbitration remedy.

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