Operational debt under a consortium supply arrangement can support Section 9 where unpaid invoices and acknowledgments show liability.

An internal consortium arrangement that separately allocated supply obligations and required payment for materials supplied was treated as giving rise to operational debt where unpaid invoices and written acknowledgments showed a debtor-creditor relationship. A Section 10A objection failed because the pleadings did not establish that the default itself occurred within the protected period, and invoices issued during that period were not enough by themselves. No pre-existing dispute was found where the correspondence instead acknowledged liability for the unpaid supply component. The ratio indicates that acknowledged dues under a segregated supply arrangement can support a Section 9 claim unless a genuine dispute or statutory bar is shown.

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Issues: (i) whether the amount claimed for supply of materials under the inter se arrangement between consortium members constituted operational debt so as to sustain a Section 9 application; (ii) whether the application was barred by Section 10A of the Insolvency and Bankruptcy Code, 2016; (iii) whether there was any pre-existing dispute defeating admission.

Issue (i): whether the amount claimed for supply of materials under the inter se arrangement between consortium members constituted operational debt so as to sustain a Section 9 application

Analysis: The parties had entered into a consortium arrangement only for bidding and execution of the OPTCL work, but their internal agreement and addendum specifically segregated responsibilities. The operational creditor was assigned the supply component, while the corporate debtor was obliged to make payment for such supplies after receiving amounts from OPTCL. The claim in the Section 9 application was confined to unpaid supply invoices and not to any profit-sharing entitlement. The corporate debtor's own letter acknowledged receipt of funds from OPTCL, part payment to the operational creditor, and an outstanding balance for supply of materials. These facts established a debtor-creditor relationship in relation to the supply component.

Conclusion: The claim arose from an operational debt and was maintainable under Section 9.

Issue (ii): whether the application was barred by Section 10A of the Insolvency and Bankruptcy Code, 2016

Analysis: Section 10A bars initiation for defaults occurring during the protected period. The pleadings before the adjudicating authority did not lay a factual foundation for a Section 10A objection. The unpaid claim was linked to invoices and default asserted beyond the protected period, and the relevant default was treated as the non-payment due after receipt of funds from OPTCL. Mere reference to invoices issued during the protected period was insufficient to dislodge the claim in the absence of material showing that the default itself occurred within that period.

Conclusion: The Section 10A objection was rejected and did not bar admission.

Issue (iii): whether there was any pre-existing dispute defeating admission

Analysis: The correspondence relied upon by the appellant did not disclose a genuine dispute as to the supply component debt. On the contrary, the corporate debtor had acknowledged liability in writing, including the unpaid balance for materials supplied. The letter addressed to OPTCL also referred to the operational creditor's dues as outstanding and sought intervention for payment. In these circumstances, the dispute projected by the appellant was not a pre-existing dispute concerning the operational debt claimed in the Section 9 application.

Conclusion: No pre-existing dispute was established.

Final Conclusion: The Section 9 admission order was affirmed, the appeal failed, and the corporate insolvency resolution process was allowed to proceed, with liberty to seek withdrawal under Section 12A in the event of settlement.

Ratio Decidendi: Where an internal consortium arrangement specifically allocates a supply obligation to one member and obliges the other to make payment for such supplies, unpaid invoices supported by acknowledgment of liability constitute operational debt, unless a genuine pre-existing dispute or a statutory bar under Section 10A is shown.

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