Pre-existing dispute must be bona fide; admitted running-account liability supports admission of an operational creditor's insolvency application.

An operational creditor's Section 9 insolvency application may proceed where the corporate debtor admits a running account and liability above the statutory threshold, while alleged disputes are unsupported or inconsistent with continued transactions. Unspecified payments may be appropriated in the running account on a first-in-first-out basis; financier records alone do not establish invoice-specific payment instructions. Short-supply debit notes unrelated to the claimed goods and a belated Section 10A defence do not establish a bona fide pre-existing dispute. Additional documents may be accepted before final order where filed to clarify payment-related material and already known to the opposing party. The rejection of the insolvency application was legally unsustainable.

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Issues: (i) Whether the operational debt was barred from admission under Section 9 because of a pre-existing dispute, invoice-specific payments, short-supply debit notes, and the Section 10A defence; (ii) Whether the additional documents produced by the Corporate Debtor after conclusion of arguments were validly taken on record.

Issue (i): Whether the operational debt was barred from admission under Section 9 because of a pre-existing dispute, invoice-specific payments, short-supply debit notes, and the Section 10A defence.

Analysis: The Corporate Debtor's reply to the demand notice admitted a running account and the settlement balance payable after issuance of a credit note. Even after allowing for the credit note, the admitted liability exceeded the statutory threshold. Payments were made without instructions requiring their appropriation to specified invoices; the Operational Creditor was therefore entitled to appropriate them in the running account on a first-in-first-out basis. The financier's disbursement records did not establish invoice-wise payment instructions to the Operational Creditor. The alleged short supply and debit notes did not concern the goods for which payment was claimed, and continued purchase orders were inconsistent with a genuine subsisting dispute. The Section 10A objection was an afterthought because the subject invoices did not relate to the protected period. The Corporate Debtor's contrary stand on the nature of the account was impermissible.

Conclusion: The alleged disputes were illusory, spurious, and moonshine; no genuine pre-existing dispute existed, and the Section 9 claim satisfied the threshold requirement. This issue was decided in favour of the Appellant.

Issue (ii): Whether the additional documents produced by the Corporate Debtor after conclusion of arguments were validly taken on record.

Analysis: There is no absolute bar to filing documents before the final order on an insolvency application. The additional material was filed to clarify challenged payment-related documents, and the WhatsApp communications were already within the Appellant's knowledge and possession.

Conclusion: The order taking the additional documents on record was valid. This issue was decided against the Appellant.

Final Conclusion: The rejection of the operational creditor's insolvency application was legally unsustainable because the admitted operational debt crossed the applicable threshold and the asserted defences did not disclose a bona fide pre-existing dispute.

Ratio Decidendi: Where a corporate debtor admits a running account and liability exceeding the statutory threshold, but fails to give payment-appropriation instructions, it cannot defeat an insolvency claim through inconsistent, unsubstantiated, or afterthought defences styled as pre-existing disputes.

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