Pre-existing dispute defeats Section 9 insolvency claim where communications show bona fide disagreement before demand notice.

A Section 9 insolvency application was held not maintainable where the record showed a pre-existing dispute between the parties. WhatsApp messages and related correspondence evidenced disagreement over delivery, market conditions, adjustment of losses, and handling of the contracted goods before the demand notice was issued. The dispute was found to be plausible and bona fide, and not spurious, illusory, or moonshine. On that basis, the insolvency process could not be used as a substitute for debt recovery, and the application was rejected.

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Issues: Whether the Section 9 insolvency application was maintainable in the presence of a pre-existing dispute between the parties.

Analysis: The WhatsApp communications and related correspondence showed that the parties had already been disputing delivery, market conditions, adjustment of losses, and the handling of the contracted goods before issuance of the demand notice. The material on record supported a plausible and bona fide dispute, and the dispute was not shown to be spurious, illusory, or moonshine. In such circumstances, the insolvency process could not be used as a substitute for debt recovery.

Conclusion: The Section 9 application was not maintainable because a pre-existing dispute existed between the parties.

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