Under Section 9(5)(ii)(d) of the IBC, the Adjudicating Authority must reject a Section 9 application if the Operational Creditor has received a notice of dispute from the Corporate Debtor, indicating existence of a plausible pre-existing dispute that requires further investigation and is not spurious, hypothetical or illusory.

Per: Barun Mitra, Member (Technical)

The present Appeal, filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’ in short) arises from the Impugned Order dated 11.06.2025 (hereinafter referred to as the ‘Impugned Order’) passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench) in C.P. (I.B.) No. 205/KB/2023. By the said Impugned Order, the Adjudicating Authority has declined to admit the Section 9 application preferred by the Appellant/Operational Creditor-M/s Airtech Airconditioners seeking initiation of Corporate Insolvency Resolution Process (‘CIRP’ in short) against the Respondent/Corporate Debtor-Kamladityya Construction Private Limited in respect of purported operational debt due and payable to the Appellant. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant.

2. Introducing the facts of the case and making their submissions as pleaded in the appeal, the Ld. Counsel for the Appellant submitted that it was engaged in the business of providing firefighting and Heating Ventilation and Air Conditioning (‘HVAC’ in short) services on contractual basis and had established a business relationship with the Respondent/Corporate Debtor-Kamladityya Construction Pvt Ltd, for execution of firefighting and HVAC works in their infrastructure projects. The Respondent had awarded contractual works in four separate projects to the Appellant in 2018 viz. Industrial Model Township, Rohtak in Haryana; Maharani Laxmi Bai Medical College, Jhansi in Uttar Pradesh; MSME Project, Kanpur in Uttar Pradesh and NICF Campus, Ghitorni in New Delhi. It was submitted that pursuant to the work orders issued by the Respondent, the Appellant had duly executed the contractual works and maintained running accounts in terms of the agreed payment mechanism. The Appellant accordingly raised invoices and RA bills for the services rendered from time to time and the total unpaid operational debt under the invoices raised by them amounted to Rs. 2,53,04,702.00. Assertion was also made that apart from the invoiced amounts, the Appellant had also rendered additional services and incurred substantial expenditures in the execution of the projects for which also unbilled amounts remained due which were all acknowledged in the running account maintained between the two parties. While the projects remained under execution, it is contended that the Respondent had never raised any contemporaneous dispute with regard to the quality of services, workmanship, or delay and to the contrary not only accepted the work as executed by the Appellant but also released part payments under several invoices, thereby unequivocally admitting the existence of operational debt and liability to pay the balance amounts. However, when subsequent requests to the Respondent for release of the outstanding dues did not fructify, the Appellant issued a Section 8 Demand Notice on 21.10.2022 for a sum of Rs. 7.91 Cr together with interest at the rate of 18% per annum. The Respondent admittedly sent their reply on 03.11.2022 denying their liability to pay and allegedly raised vague allegations regarding quality issues as an afterthought to evade repayment of legitimate dues. Since no further payment was forthcoming, it was submitted that the Appellant filed an application under Section 9 of the IBC before the Adjudicating Authority on 09.09.2023 seeking initiation of CIRP against the Respondent. However, despite their being clear documentary evidence showing admitted liability and no evidence of any pre-existing dispute, the Adjudicating Authority vide impugned order dated 11.06.2025 erroneously dismissed the Section 9 application on grounds of pre-existing dispute even though no such disputes were raised prior to service of the Section 8 demand notice. Further the Adjudicating Authority had wrongly relied upon the provisions of Section 10A of IBC to reject the Section 9 petition without appreciating that even after excluding