JUDGMENT :

Sudhansu Jyoti Mukhopadhaya, Chairperson

The appellant operational creditor filed petition under section 9 of the Insolvency & Bankruptcy Code 2016 (hereinafter referred to as ‘I & B Code’ 2016) which was rejected by the ‘Adjudicating Authority’. Mumbai Bench by the impugned order dated 27th January 2017, with following observations:—

“When this Bench has directed the petitioner to furnish the requisite documents as described u/s. 9 of the Insolvency & Bankruptcy Code, the Petitioner filed the Notice of dispute raised by the Corporate Debtor disclosing the Corporate Debtor disputing the claim made by the Petitioner.

Though the petitioner filed all the invoices raised on the Debtor Company aggregating debt to Rs. 20,08,202, details of transaction on account of which debt fell due, default thereof and demand notice served upon the Debtor, for this Bench having noticed that notice of dispute raised by Respondent side has not been annexed to the CP, this Bench hereby directed to furnish the documents as prescribed u/s. 9 of the I&BP Code. In compliance of it, the Petitioner filed the notice of dispute issued by the Corporate Debtor disclosing the corporate debtor disputing the claim made by the Petitioner. On perusal of this sub-section (5) of Section 9 of this Code, it is evident that notice of dispute has been received by the Operational Creditor.

On perusal of this notice dated 27.12.2016 disputing the debt allegedly owed to the petitioner, this Bench, looking at the Corporate Debtor disputing the claim raised by the Petitioner in this CP, hereby holds that the default payment being disputed by the Corporate Debtor, for the petitioner has admitted that the notice of dispute dated 27th December, 2016 has been received by the operational creditor, the claim made by the Petitioner is hit by Section (9)(5)(ii)(d) of the Insolvency and Bankruptcy Code, hence this Petition is hereby rejected.”

3. The plea taken by the appellant is that mere disputing a claim of default of debt cannot be a ground to reject the application under Section 9 of ‘I & B Code’, till the corporate debtor refer any dispute pending.

4. The only question arises for considered in this appeal is what does “dispute” and “existence of dispute” means for the purpose of determination of a petition under section 9 of the ‘I & B Code’?

5. Unlike Section 7 of the Code, before making an application to the Adjudicating Authority under Section 9 of the Code, the requirements under Section 8 of the Code are required to be complied with, which reads as under:—

“8. Insolvency Resolution by operational creditor

(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.

(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor—

(a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;

(b) the repayment of unpaid operational debt—

(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or

(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor.

Explanation.— For the purposes of this section, a “demand notice” means a notice served by an operational creditor to the corporate debtor demanding repayment of the operational debt in respect of which the default has occurred.”

6. In sub-section (1) of Section 8 of the ‘I & B Code’, though the word “may” has been used, but in the context of Section 8 and Section 9 reading as a whole, an ‘Operational Creditor,’ on occurrence of a defaul