### Reconciliation Requests and Contractual Default Windows Constitute Pre-Existing Dispute Barring Section 9 Proceedings Key Legal Takeaways: * Pre-Existing Dispute: Persistent requests for account reconciliation, disputes over invoice discrepancies, and potential Liquidated Damages (LD) claims via email correspondence prior to a Section 8 demand notice constitute a "plausible contention" of a pre-existing dispute under the *Mobilox* standard. * Premature Default: If the contract stipulates that "default" only occurs after a specific period (e.g., 365 days) from the due date, a Section 9 application filed before the expiry of such period is premature and maintainable. * Nature of Reconciliation: Following the *Sabarmati Gas* precedent, the need for "reconciliation"—defined as an adjustment of amounts to reach an agreement—indicates a lack of consensus on the debt, thereby establishing a legal dispute that necessitates investigation beyond summary insolvency proceedings.

The Appellant (Operational Creditor), a partnership firm, was engaged by the Respondent (Corporate Debtor) for wind energy projects.

The Appellant raised 75 invoices totaling approx. ₹111 Crore, of which approx. ₹25.72 Crore remained unpaid.

The Appellant issued a Demand Notice under Section 8 of the IBC on 02.07.2019.

The Respondent replied on 17.07.2019, denying the debt and later invoked arbitration on 04.02.2020, claiming damages of ₹54.50 Crore due to delays.

The Adjudicating Authority (NCLT, Ahmedabad) rejected the Section 9 application on 13.12.2023, citing a pre-existing dispute and lack of default.

Whether the Section 9 application was maintainable in light of a "pre-existing dispute" between the parties.

Whether the demand notice was premature based on the specific "default" clauses in the Work Order.

The court primarily applied Section 9 of the Insolvency and Bankruptcy Code, 2016, regarding the initiation of CIRP by an operational creditor.

It relied on the definition of "dispute" under Section 5(6) of the Code.

The court followed the "plausible contention" test established in *Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.*, which mandates the rejection of an application if a dispute truly exists and is not spurious or moonshine.

Furthermore, it applied the principle from *Sabarmati Gas Ltd. v. Shah Alloys Ltd.*, holding that communications for reconciliation of accounts can evidence a pre-existing dispute.

The Tribunal found that extensive email correspondence dated 17.08.2018, 13.11.2018, and 05.12.2018—all prior to the Section 8 Demand Notice—contained specific discrepancies regarding invoices, tax issues, and claims for Liquidated Damages (LD) due to project delays.

These communications indicated that the debt was not "undisputed" as the Respondent had explicitly stated that final payments were subject to reconciliation of generation losses and LD.

The Tribunal noted that the parties were already in active arbitration before a former Supreme Court judge where the Respondent had filed claims exceeding the Appellant’s dues.

Additionally, Clause 38 of the Work Order stipulated that a "default" only occurs 365 days after the due date; since the final invoices were dated May 2019, the July 2019 Demand Notice was contractually premature.

The Tribunal dismissed the appeal, noting that even though the parties mentioned a potential settlement during the pendency of the judgment, no formal consent or agreement was produced to override the merits.

The Appeal was dismissed with no orders as to costs.