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The NCLAT allowed the appeal against the rejection of the Section 9 application by the Adjudicating Authority, holding that the latter erred in concluding the corporate debtor's financial solvency without adequate findings. The tribunal emphasized that debt and default were established, as acknowledged in ledger accounts and GST considerations. It reiterated the Supreme Court's distinction between recovery of debt and insolvency resolution proceedings, underscoring that the presence of a pre-existing dispute must be genuine and not a mere façade. The tribunal applied the Mobilox principles, clarifying that while pre-existing disputes related to quality or quantity of goods or counterclaims raised prior to the demand notice can bar admission, the disputes in the present case did not qualify as such. Consequently, the impugned order rejecting the Section 9 application was set aside and the appeal was allowed.
The NCLAT allowed the appeal against the rejection of the Section 9 application by the Adjudicating Authority, holding that the latter erred in concluding the corporate debtor's financial solvency without adequate findings. The tribunal emphasized that debt and default were established, as acknowledged in ledger accounts and GST considerations. It reiterated the Supreme Court's distinction between recovery of debt and insolvency resolution proceedings, underscoring that the presence of a pre-existing dispute must be genuine and not a mere façade. The tribunal applied the Mobilox principles, clarifying that while pre-existing disputes related to quality or quantity of goods or counterclaims raised prior to the demand notice can bar admission, the disputes in the present case did not qualify as such. Consequently, the impugned order rejecting the Section 9 application was set aside and the appeal was allowed.
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