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Corporate Debtor failed to repay operational dues, leading to a Section 9 application by the Operational Creditor. However, pre-existing disputes were evident from the Notice of Disputes, fulfilling Section 8(2)(1)(a) requirements. The defense raised cannot be deemed spurious or illusory. For such disputed operational debt, Section 9 proceedings cannot be initiated. The Adjudicating Authority erred in admitting the Section 9 application, disregarding the Notice of Disputes. The reliance on Naresh Sevantilal Shah judgment was misplaced due to distinguishable facts. The Impugned Order initiating CIRP and subsequent orders were set aside, releasing the Corporate Debtor from CIRP with immediate effect. The appeal was allowed.
Corporate Debtor failed to repay operational dues, leading to a Section 9 application by the Operational Creditor. However, pre-existing disputes were evident from the Notice of Disputes, fulfilling Section 8(2)(1)(a) requirements. The defense raised cannot be deemed spurious or illusory. For such disputed operational debt, Section 9 proceedings cannot be initiated. The Adjudicating Authority erred in admitting the Section 9 application, disregarding the Notice of Disputes. The reliance on Naresh Sevantilal Shah judgment was misplaced due to distinguishable facts. The Impugned Order initiating CIRP and subsequent orders were set aside, releasing the Corporate Debtor from CIRP with immediate effect. The appeal was allowed.
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