CIRP Admission over Genuine Pre-Existing Dispute

The National Company Law Appellate Tribunal held that insolvency proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016 cannot be invoked where substantial pre-existing disputes relating to quality defects, delayed supplies, penalties, and reconciliation of accounts existed prior to issuance of the demand notice. 

The Appellate Tribunal observed that the operational creditor had attempted to use the IBC mechanism as a recovery tool despite acknowledged disputes between the parties.