Pre-existing dispute and full settlement barred continuation of operational creditor insolvency proceedings after all creditor claims were discharged.

Insolvency proceedings based on an operational creditor's application cannot continue where the claimed debt has been fully settled, the creditor consents to reversal of admission, and no other creditor claim remains unpaid. A genuine dispute over transportation-charge billing, including the distance measurements used for invoicing, existed before the statutory demand notice and independently precluded sustaining the application. The only other claim received during the process, for provident-fund dues, was also discharged in full. The insolvency application therefore lacked any subsisting creditor claim requiring continuation of the process.

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Issues: Whether insolvency proceedings initiated on an operational creditor's application could continue after full settlement of the claim, discharge of the only other creditor's claim, and acknowledgment of a pre-existing dispute.

Analysis: The operational creditor's claim was fully and finally settled and it consented without objection to reversal of the admission order. The record also established that the claim concerning transportation charges had been disputed before issuance of the demand notice, particularly regarding the distance measurements forming the basis of billing. The only claim received during the process, relating to provident-fund dues, had also been paid in full. In these circumstances, there was no subsisting creditor claim requiring continuation of the insolvency process.

Conclusion: The operational creditor's insolvency application could not be sustained, as the debt stood settled and a genuine pre-existing dispute existed before the statutory demand notice.

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