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TaxTMI 
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2026 (4) TMI 1837
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....ss ('CIRP' in short) against the Respondent/Corporate Debtor-Pragati Infra and Engineering LLP. Being aggrieved by the dismissal of its Section 9 application, the Appellant has come up in appeal. 2. Coming to the brief factual matrix of the present case from the material placed on record, we notice that the Appellant-Operational Creditor was engaged by the Respondent-Corporate Debtor for execution of certain civil works including supply of goods and services pursuant to a work order dated 01.05.2020. The Appellant claimed to have satisfactorily executed the assigned works and raised three invoices dated 07.06.2020, 05.01.2021 and 09.02.2021 aggregating to Rs. 1,26,89,529.34/- against which the Corporate Debtor made partial payments against the first and second invoices. However, the Appellant claiming that in accordance with the payment terms under the work order, the entire payment should have been made within six months from the date of the last invoice i.e. 09.02.2021, which not having been done, this led to unpaid operational debt which had become due and payable following which the Appellant issued a demand notice on 01.04.2023 under Section 8 of the IBC seeking payment of ....
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.... in terms of the payment conditions stipulated in the work order. The unpaid dues under all invoices formed part of a continuing operational liability which had to be considered cumulatively for the purpose of determining quantum of default and maintainability of the Section 9 application from the threshold perspective. It was vehemently contended that the Adjudicating Authority had erred in placing undue reliance on the contention of the Corporate Debtor with respect to discrepancies in the record submitted before the Information Utility while overlooking the fact that the requirement of filing of such record is directory in nature and not mandatory. Even if there were any errors in the reporting made to NeSL, the same could not have defeated the substantive claim of the Appellant, especially when the operational debt and default stood well substantiated. Moreover, partial payments were made by the Corporate Debtor without raising any specific and substantiated dispute prior to the Section 8 demand notice which clearly shows that the liability was acknowledged by the Corporate Debtor and there was no genuine pre-existing dispute surrounding the operational debt. It was erroneous o....
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....en received without any demur or protest. Hence the dismissal of the Section 9 application on grounds of pre-existing dispute; non-fulfilment of the threshold requirement and applicability of Section 10A of the IBC was erroneous. 6. When we look at the impugned order, we find that that the Adjudicating Authority has interalia dwelled on the question as to whether the operational debt was disputed by the Corporate Debtor and also whether the Section 9 application was barred in terms of Section 10A and failed to meet the threshold restrictions. 7. Coming to the issue of pre-existing dispute between the parties, we find that in the impugned order, the Adjudicating Authority has taken notice at para 13.3 that payment terms at clause 1 clearly provided that 90% against the RA bills were to be paid from the date of approval of the bill and that these payments were to be made when both parties had mutually agreed to the bills. The Adjudicating Authority further noticed that in the present case there is nothing to show that the amounts claimed against these bills had been reconciled or that the amounts were mutually agreed upon by both the parties. Furthermore, objections which had b....
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....s no evidence placed on record by the Corporate Debtor to show that the bills had been accepted by the Respondent. Clearly there existed a serious pre-existing dispute between the parties regarding reconciliation of accounts. Given this backdrop, the Adjudicating Authority committed no error in holding that as the account between the parties had not been finally settled in accordance with the payment terms, no operational debt had crystallised or come into existence. 10. This brings us to the information submitted by the Appellant in the Information Utility, namely NeSL, regarding their claim against the Corporate Debtor. The Appellant while making submissions before us contended that the Corporate Debtor had falsely alleged that the default recorded with the Information Utility was disputed, whereas in fact NeSL had merely followed the statutory procedure under Regulation 21 of the IBBI (Information Utilities) Regulations, 2017 by issuing notice to the debtor for authentication of the default and the Corporate Debtor was deliberately mischaracterising the same to create a false impression of dispute. An opportunity was therefore given by us to the Appellant to file the NeSL rep....
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....dent laid down by the Hon'ble Supreme Court in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. (2018) 1 SCC 353 that all that the Adjudicating Authority is required to see once a dispute is raised is whether there is a plausible contention which requires further investigation and that the dispute raised is not a patently feeble legal argument or an assertion of fact unsupported by evidence without having to go into the merits of the dispute. The relevant extracts of the said judgement is as reproduced below: "51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(i)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which require....