Pre-existing dispute under insolvency law bars Section 9 admission when contemporaneous records show a genuine controversy.

A pre-existing dispute barred admission of the Section 9 insolvency application because contemporaneous correspondence, claims and counterclaims, a final bill raised before the demand notice, and prior invocation of arbitration all showed a real controversy between the operational creditor and the corporate debtor. At the Section 9 stage, the Adjudicating Authority's inquiry is confined to whether the dispute is genuine and not spurious, frivolous or a mere bluster; it is not to determine the merits of rival claims or conduct a detailed evidence assessment. The record showed the dispute existed before the demand notice, so the insolvency application ought not to have been admitted.

---

---

Issues: Whether a pre-existing dispute existed between the operational creditor and the corporate debtor so as to bar admission of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The dispute between the parties was supported by contemporaneous correspondence, claims and counterclaims, the final bill raised by the corporate debtor before the demand notice, and the invocation of arbitration before the insolvency proceedings progressed. The inquiry at the stage of Section 9 is limited to seeing whether there is a real dispute that is not spurious, frivolous or a mere bluster. The Adjudicating Authority is not expected to decide the merits of rival claims or conduct a detailed evaluation of evidence. The record showed that disputes had arisen well before the demand notice and that arbitration proceedings had already been invoked, which demonstrated that the controversy was not an afterthought.

Conclusion: A pre-existing dispute was established, and the Section 9 application ought not to have been admitted.

---