Case Note & Summary
The appeal was filed against an order dated 28.04.2026 by the Adjudicating Authority, which dismissed an application under Section 9 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the respondent due to a default in payment of operational debt amounting to Rs. 3,61,24,534.33. The appellant, engaged in software publishing and consultancy, claimed that the operational debt arose from goods supplied to the respondent, for which invoices were raised and part payments made. Initially, the company petition was dismissed on the grounds that the respondent was undergoing CIRP in another petition, but this Tribunal later set aside that order, allowing the appellant to revive the petition. However, the Adjudicating Authority dismissed the petition again, citing a pre-existing dispute between the parties. The respondent contended that the transactions were fraudulent, involving collusion with ex-employees, and provided evidence of legal notices disputing the transactions prior to the demand notice issued by the appellant. The court noted that the operational creditor had acknowledged some transactions but argued that the disputes raised were merely an afterthought to evade liability. The court found that the existence of a pre-existing dispute was supported by the record of the Information Utility, which indicated that the debt was marked as disputed. Consequently, the application under Section 9 was dismissed, and the appeal was also dismissed as the parties were already engaged in civil litigation regarding the same issues.
Headnote
A) Insolvency Law - Corporate Insolvency Resolution Process - Pre-Existing Dispute - Insolvency & Bankruptcy Code, 2016, Section 9 - The application under Section 9 was dismissed due to the existence of a pre-existing dispute between the parties, evidenced by prior legal notices and complaints regarding alleged fraudulent transactions. The court held that such disputes must be adjudicated in a detailed trial rather than summary proceedings (Paras 8-10).
Issue of Consideration
Whether there existed a pre-existing dispute that justified the dismissal of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
Final Decision
The appeal was dismissed, affirming the Adjudicating Authority's order that the application under Section 9 of the IBC was rightly dismissed due to the existence of a pre-existing dispute.
Law Points
- Insolvency
- Corporate Insolvency Resolution Process
- Pre-Existing Dispute
- Section 9 IBC
- Operational Debt
