Existence of a pre-existing dispute regarding debt adjustment and reconciliation precludes admission of a Section 9 application.

The Appellant executed a High Sea Sale Agreement with the Respondent (Corporate Debtor) between 2017 and 2018 for the supply of mobile parts.

The Appellant claimed outstanding dues of ₹7,41,39,165 and issued a demand notice under Section 8 of the IBC on 11.12.2019.

The Respondent replied on 19.12.2019, disputing the debt and asserting that accounts had been reconciled through prior communications.

Specifically, the Respondent relied on a letter dated 04.10.2018 regarding a tripartite adjustment of ₹3,99,47,076.92 involving BTM Exports Ltd. (the Respondent's parent company), which the Appellant had allegedly acknowledged by requesting ledger details in excel format.

The Adjudicating Authority (NCLT) dismissed the Section 9 application on 15.11.2021, citing a "plausible contention" of dispute.

Whether there existed a pre-existing dispute between the Operational Creditor and the Corporate Debtor prior to the issuance of the demand notice.

Whether the Adjudicating Authority was correct in rejecting the Section 9 application based on the "plausible contention" of a dispute regarding the adjustment of dues.

The court primarily applied Sections 8 and 9 of the Insolvency and Bankruptcy Code (IBC), 2016, which mandate the rejection of an insolvency application if a notice of dispute has been received by the operational creditor.

It relied on the landmark principle from *Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.*, establishing that the Adjudicating Authority must only determine if there is a "plausible contention" requiring investigation and not a "patently feeble" argument.

It further cited *Transmission Corporation of Andhra Pradesh Limited v. Equipment Conductors and Cables Limited*, noting IBC is not a substitute for a recovery forum.

It further cited *Kay Bouvet Engg. Ltd. v. Overseas Infrastructure Alliance (India) (P) Ltd.*, affirming that the court should not examine the merits of the dispute beyond verifying its actual existence.

Lastly, it applied *M/s. S.S. Engineering vs. Hindustan Petroleum Corporation Ltd.*, holding that Section 9 triggers only for undisputed debts.

The Appellate Tribunal observed that the Respondent had sent a notice of dispute immediately following the demand notice, referencing communications from 2018—well before the Section 8 notice.

These communications included an account adjustment letter dated 04.10.2018, which the Appellant had interacted with by requesting documents in excel format, thereby undermining the Appellant's claim of "unilateral adjustment."

The court found that the Respondent provided voluminous evidence, including ledger entries and tripartite adjustment details, which corroborated the defense that no debt was owed.

Following the *Mobilox* standard, the Tribunal reasoned that since the defense was supported by evidence and not "moonshine" or "spurious," it constituted a pre-existing dispute that precluded the summary initiation of CIRP.

The Tribunal affirmed the Adjudicating Authority's order, concluding that an Operational Creditor can only trigger CIRP for undisputed debts.

The appeal was dismissed, and the rejection of the Section 9 application was upheld.