Pre-existing dispute defeats Section 9 insolvency admission where billing and fee objections were raised before demand notice.

A Section 9 insolvency application is not maintainable where a genuine pre-existing dispute exists before the statutory demand notice. The record showed that objections to the invoices, fee claims, billing methodology, applied fee structure, and supporting documents were raised by the corporate debtor in its reply and later communications before notice was issued. Those objections were treated as a real and substantial dispute, not a feeble or illusory defence. The revised demand notice and subsequent writ proceedings did not remove the earlier dispute, so the petition had to be rejected at the threshold.

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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 record showed that disputes regarding the invoices and fee claims arose before issuance of the statutory demand notice. The corporate debtor had, in its reply and subsequent communications, questioned the manner of billing, the fee structure applied, and the supporting documentation, which constituted a real and substantial dispute rather than a feeble or illusory defence. The revised demand notice and the later writ proceedings did not displace the earlier objections. Applying the settled test for admission of an operational debt application, the existence of a genuine pre-existing dispute required rejection of the insolvency petition at the threshold.

Conclusion: The pre-existing dispute was established and the application under Section 9 was not maintainable.

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