Pre-existing dispute bars Section 9 insolvency admission when the debtor has raised a genuine, prior contractual objection.

A Section 9 insolvency application may be rejected where the corporate debtor has raised a genuine pre-existing dispute before the demand notice. Prior emails and correspondence objecting to defects, delay, non-completion and the claimed amount were treated as sufficient to show a plausible, non-spurious dispute, and the adjudicating authority was not required to finally determine the underlying contractual claim. The Section 10A argument did not change the position because the contemporaneous disputes remained decisive on maintainability. On this basis, the operational creditor was not entitled to admission of the insolvency application.

---

---

Issues: (i) Whether a pre-existing dispute existed so as to justify rejection of the Section 9 application; (ii) whether the Section 10A argument displaced the finding on maintainability.

Issue (i): Whether a pre-existing dispute existed so as to justify rejection of the Section 9 application.

Analysis: The reply to the demand notice categorically denied liability and disputed the amount claimed. The record also showed earlier emails and correspondence, sent before the demand notice, raising objections regarding deficiencies, defects, delay, and non-completion in relation to the projects. On this material, the dispute was held to be genuine and not a feeble or illusory defence. In a Section 9 proceeding, the authority is only to see whether a plausible dispute exists requiring further adjudication, and not to finally decide the merits of the underlying contractual claims.

Conclusion: The rejection of the Section 9 application on the ground of pre-existing dispute was upheld and the finding was against the appellant.

Issue (ii): Whether the Section 10A argument displaced the finding on maintainability.

Analysis: Even assuming some invoices were outside the Section 10A embargo, that circumstance did not remove the effect of the contemporaneous and prior disputes communicated by the corporate debtor. The existence of a real dispute remained decisive for the fate of the Section 9 proceeding.

Conclusion: The Section 10A contention did not alter the result and was against the appellant.

Final Conclusion: The operational creditor was not entitled to admission of its insolvency application because the record disclosed a real and pre-existing dispute, so the dismissal of the appeal was affirmed.

Ratio Decidendi: A Section 9 insolvency application must be rejected where the corporate debtor has communicated a genuine pre-existing dispute before the demand notice, since the adjudicating authority is not to undertake final adjudication of the underlying claim but only to see whether the dispute is plausible and non-spurious.

---