A Section 9 application under the IBC must be rejected if there is a genuine pre-existing dispute or a record of dispute in an Information Utility, even if the application is otherwise complete.

ORDER

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

The present Appeal, preferred under Section 61 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’ in short) arises from the Impugned Order dated 09.05.2025 (hereinafter referred to as the ‘Impugned Order’) passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench) in CP(IB)/291/CHD/HRY/2023. By the said impugned order, the Adjudicating Authority dismissed the Section 9 application filed by the Appellant/Operational Creditor-Span Engineers, seeking initiation of the Corporate Insolvency Resolution Process (‘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 the operational debt. The Corporate Debtor replied to the demand notice on 12.04.2023 raising certain disputes. Also, another communication dated 05.05.2023 was issued by the Appellant regarding reporting of default by the Corporate Debtor with the National E- Governance Services Limited (‘NeSL’ in short) which the Corporate Debtor claimed to have been disputed. The Appellant not having received any further payment, filed an application under Section 9 of the IBC claiming an operational debt of Rs. 1.26 Cr.. The Corporate Debtor filed its reply thereto on 14.02.2024 objecting to the Section 9 application by submitting that the claim was not due and payable for the operational debt required reconciliation of accounts; that invoices submitted by the Appellant were unsigned and fabricated; that there were statutory compliance issues relating to Provident Fund and GST; that the alleged default was barred under Section 10A; that the claim did not satisfy the minimum threshold under Section 4 and that the NeSL status also reflected the claim as disputed. The Adjudicating Authority passed the impugned order on 09.05.2025 dismissing the Section 9 application on grounds of pre-existing dispute; non-fulfilment of the threshold requirement and applicability of Section 10A of the IBC. Aggrieved with the findings of the Adjudicating Authority, the present appeal has been preferred by the Appellant.

3. Making submissions on behalf of the Appellant, Shri S. Vedhavel, Learned Counsel contended that the Adjudicating Authority committed a grave error in rejecting the application under Section 9 of the IBC, 2016 though the existence of operational debt and default had been conclusively established by the Appellant supported by cogent documentary evidence like work order, invoices, delivery challans, transport records and email acknowledgments which all evidenced the supply and acceptance of goods and services by the Corporate Debtor. Submission was pressed that the operational debt arose from a continuous running account maintained between the two parties and the liability of the Corporate Debtor had crystallised upon non-payment of the third invoice, resulting in a cumulative outstanding operati