Operational debt dispute bars Section 9 insolvency where freight liability remains unresolved on the documents.

A Section 9 Insolvency and Bankruptcy Code petition requires a clear, undisputed operational debt and default. On the record, rival contemporaneous documents on freight payment for the 2019 voyage created a genuine dispute over whether the respondent's cargo liability had already been discharged through third parties or remained outstanding. The appellant's settlement with the shipowner did not conclusively establish the respondent's liability because the respondent was not a party to that settlement and the underlying facts remained unresolved. As the defence was supported by documents and was not sham or illusory, the matter needed detailed factual inquiry beyond Section 9's summary scope, and the application was not maintainable.

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Issues: Whether the appellant established a clear and undisputed operational debt and default against the respondent so as to sustain a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The dispute turned on rival contemporaneous documents concerning freight payment for the 2019 voyage, including emails, declarations, invoices, remittances and settlement terms. The material showed a genuine controversy on whether freight attributable to the respondent's cargo had already been discharged through BST and Globechart, or whether any liability survived and was later recoverable by the appellant. The settlement between the appellant and the shipowner could not, by itself, conclusively fix the respondent's liability, especially when the respondent was not a party to that settlement and the underlying factual controversy remained unresolved. The asserted defence was supported by documents and was not sham or illusory, and deciding liability would require detailed evidentiary inquiry beyond the summary scope of Section 9.

Conclusion: The appellant failed to establish an undisputed operational debt and default, and the Section 9 application was not maintainable.

Ratio Decidendi: Where the record discloses a genuine pre-existing dispute requiring detailed factual investigation, insolvency proceedings under Section 9 cannot be used as a substitute for debt recovery.

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