M/S Samman Lal Sher Singh Pvt Ltd vs M/S Rs Print Solution Pvt Ltd

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH: NEW DELHI Company Appeal (AT) (Insolvency) No. 804 of 2025 [Arising out of the Order dated 27.03.2025, passed by the 'Adjudicating Authority' (National Company Law Tribunal, New Delhi Bench) in CP(IB)/864/ND/2024]

IN THE MATTER OF: M/s Samman Lal Sher Singh Pvt. Ltd. Having its registered office at: 2343, Chatta Shah Ji, Chawri Bazar, Delhi-110006 Email: sangeet@sammanlal.com ...Appellant

Versus

M/s RS Print Solution Pvt. Ltd. Having its office at WZ-909/2, Shankar Lal Gali, Ring Road, Naraina, New Delhi - 110028 Email: accounts@rsprintsolutions.com ...Respondent Present: For Appellant : Mr. NPS Chawla, Mr. Nishitha Khurana, Ms. Mahima Shekhawat and Mr. Jasjeet Singh, Advocates. For Respondent : Ms. Monika Goel, Mr. Ashutosh Srivastava, Mr. Arstu Bhatt and Ms. Samriddhy Jindal, Advocates

JUDGMENT

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)]

Present Appeal challenges the Impugned Order ("Order") dated

27.03.2025, whereby the Adjudicating Authority ("NCLT") dismissed the

Appellant's petition under Section 9 of the Insolvency and Bankruptcy Code,

2016 ("IBC") on the ground of "pre-existing dispute.

Submissions of the Appellant

2. The Appellant (OC) and the Respondent (CD) shared a commercial

relationship spanning over 15 years, wherein the Appellant regularly supplied raw materials on credit. The Appellant raised invoices between 01.08.2023

and 26.09.2023 amounting to ₹6,58,38,774/-, against which the Respondent

made part payments totalling ₹4,30,03,081/-, the last being on 09.07.2024.

Upon non-payment of the remaining dues, the Appellant issued a demand

email dated 12.09.2024 claiming ₹2,28,35,693/-, enclosing reconciled

ledgers. As per the invoice terms, any issues relating to the quality of goods

had to be raised within 15 days of delivery. No such objections were raised by

the CD within the stipulated period. On 08.11.2023, the CD, via email, shared

its ledger reflecting an outstanding debit balance of ₹6,58,11,511/- payable

to the Appellant. Appellant further submitted that on 12.09.2024, the

Appellant issued a formal demand email seeking payment of ₹2,28,35,693/-,

warning that legal action would be taken in case of non-payment. Instead of

replying to the said email or raising any genuine dispute, the Corporate

Debtor (CD), uploaded fabricated E-way bills worth on the GST portal,

purporting to reflect return of goods. These were unsupported by any invoices,

delivery challans, or other contemporaneous documentation. Upon objection

by the Appellant on 13.09.2024, the CD withdrew the said E-way bills without

offering any explanation, thereby reinforcing their spurious and afterthought

nature.

3. Subsequently, on 19.10.2024, the Respondent, for the first time, raised

objections regarding product quality and discounts, while not disputing the

debt itself. A legal demand notice under Section 8 of IBC was issued by the

Appellant on 25.10.2024, followed by a Section 9 petition on 04.12.2024.

Company Appeal (AT)(Insolvency) No. 804 of 2025 2 of 19

4. The petition was dismissed on 27.03.2025 by the Adjudicating

Authority citing pre-existing disputes based on the Respondent's email dated

19.10.2024. The present appeal was filed on 26.04.2025. Respondent further

contends that the so-called "dispute" raised by the Corporate Debtor is neither

real, nor pre-existing, nor bona fide, as required under Section 8(2)(a) of the

IBC. As held by the Hon'ble Supreme Court in Mobilox Innovations Pvt. Ltd.

v. Kirusa Software Pvt. Ltd. [(2018) 1 SCC 353], spurious or illusory

disputes raised only in response to a demand notice are not valid. In the

present case, no document or journal voucher alleging corporate discounts or

quality issues was ever raised prior to the Appellant's demand email dated

12.09.2024. On the contrary, the Respondent had been making part-

payments acknowledging the dues, thereby negating any genuine dispute.

5. Further in Surendra Sancheti v. Gospell Digital Technologies,

Company Appeal (AT) (Insolvency) No. 583 of 2024, this Appellate Tribunal

held that mere post-demand notice objections without prior credible dispute

do not qualify as real or pre-existing disputes under IBC. The Corporate

Debtor's consistent acknowledgment of debt and lack of evidence supporting

alleged disputes justified initiation of CIRP under Section 9. Appellant further

contends that the Corporate Debtor's belated objections regarding quality

issues and corporate discounts are afterthoughts, unsupported by any

contemporaneous evidence. Substantial payments were made post-

reconciliation, indicating no genuine dispute. The Corporate Debtor cannot

now resile from its clear admissions. It was only on 19.10.2024, over a month

after the demand email, that the CD, for the first time, alleged disputes

Company Appeal (AT)(Insolvency) No. 804 of 2025 3 of 19 relating to poor quality goods, discounts, and warehousing charges. The

attached Journal Vouchers, relied upon by the CD, were backdated, not GST-

compliant, and had never been previously communicated.

6. The Adjudicating Authority erred in dismissing the Section 9 petition

despite the established operational debt and absence of a real pre-existing

dispute. It is prayed that the appeal be allowed and the petition admitted.

Submissions of the Respondent

7. The Respondent and the Appellant had been in a business relationship

for the past one and a half decades. However, after September 2023 the

Respondent stopped purchasing raw material from the Appellant. The ledger

accounts provided by the Appellant, along with the supporting

documentation, can be carefully reviewed to find that the dispute arose in

September 2023 when the Appellant supplied inferior-quality goods to the

Respondent, and the Respondent stopped purchasing the raw material from

the Appellant, who used to buy millions' worth of raw material from the

Appellant.

8. The Director, Sh. Sangect Jain, on behalf of the Appellant company,

visited the office of the Respondent, where it was agreed that the raw material

would be lifted once another party desired to buy the same. The Respondent

has communicated with the Appellant from time to time, both telephonically

and during one-on-one meetings with the director of the Appellant company,

who used to visit the Respondent's office, that the inferior quality raw

materials that were supplied would be returned. The-debit note amounting to

Company Appeal (AT)(Insolvency) No. 804 of 2025 4 of 19 ₹1,06,66,456/- dated 26-03-2024 was also communicated to the Appellant,

and the hard copy was provided to the Appellant. It was agreed that an

amount of ₹58,39,417/- would be paid as the expenses incurred for the

warehousing of the inferior quality goods supplied by the Appellant.

9. The Appellant is a dealer and supplier of products manufactured by

Century Paper Mill, as well as other mills such as Genus Paper. The

Respondent has placed orders for the supply of raw materials on various

occasions, manufactured by various mills, including Century Pulp & Paper,

which were supplied by the Appellant, and invoice(s) have also been received

by the Respondent. The Appellant concealed the benefit provided by the

principal supplier, M/s Century Paper & Pulp, and not only concealed it but

also fraudulently took all the benefits that were given in the name of the

Respondent. The Appellant, in their reply, has not denied the fact that the

discounts were received by the Appellant. After the one to one meeting with

the Appellant, and when the Appellant also agreed with the same, the debit

notes were duly raised by the Respondent, being Voucher No. 302 dated

23.03.2024 for the corporate discounts received amounting to ₹66,44,669/-.

10. The Appellant also admitted that the corporate discounts given by M/s

Century Pulp would be reversed to the respondent. The goods supplied by the

appellant were also promised to be taken back. It was shocking for the

Respondent when an email dated 12.09.2024 from the Appellant company

was received regarding the balance amount, although the debit notes raised

by the Respondent had been communicated to the Appellant. It was the

Company Appeal (AT)(Insolvency) No. 804 of 2025 5 of 19 Appellant who had to provide the credit notes. It was then that the

Respondent decided to return the raw material to the Appellant, and the E-

way bills were also raised; however, the same were rejected by the Appellant.

It is pertinent to mention here that the Respondent received the signal that

the Appellant was trying to evade liability for issuing the credit notes; it was

then that the respondent raised the two debit notes for the interest charged

on the monies used by the Appellant, which the Appellant had fraudulently

taken as discounts on corporate bookings given by the principal supplier to

the Respondent. The two debit notes dated 01.10.2024 were raised for the

interest charged on the monies used by the Appellant, amounting to

₹95,757/- and amounting to ₹7,97,976/-.

11. Further, it is not out of place to mention herein that the Appellant is

demanding the payment of invoices raised from 1st August 2023 until 26th

September 2023 amounting to ₹2,28,35,693/-. The debit balance shown on

the ledger accounts as of 31st July 2023 was ₹8,83,38,823/- which clearly

shows that the Appellant used to maintain the running accounts of the

Respondent. It is the balance shown on the debit side for which the Corporate

Debtor had filed the petition in the Adjudicating Authority, which was rightly

dismissed. For the sake of argument, although not admitted even a pinch, if

the contention of the Appellant is demanding the payment of 51 invoices

raised from August, 2023 until September 2023, then it must be noted that

after August, 2023, the Respondent has transferred more than the invoiced

amount.

Company Appeal (AT)(Insolvency) No. 804 of 2025 6 of 19

12. The Respondent had raised concerns regarding: quality of goods;

corporate discounts assured but not passed on; warehousing costs for storing

substandard material; payments made in cash or through third parties. These

were raised much prior to the issuance of the Section 8 demand notice and

are well-documented in emails dated 19.10.2024 and supported by voucher

entries and internal ledger records. The existence of a dispute is factual and

cannot be dismissed simply because it was not raised in a formal legal notice

earlier.

13. The Appellant's reliance on the Respondent's ledger dated 08.11.2023

is misleading. The said ledger was sent during reconciliation discussions and

did not constitute an unequivocal admission of liability. Even in the said

communication, the Appellant was made aware of corporate discounts and

other adjustments, which they have chosen to ignore.

14. Respondent contends that the email dated 08.11.2023 sharing ledger

details was solely for the purpose of reconciliation, not an admission of debt.

The Appellant's own email dated 12.09.2024 acknowledges this by referring

to discrepancies identified during reconciliation, such as an unshared debit

note and TDS deduction. Thus, the exchange was part of ongoing account

settlement, not a conclusive admission of liability.

15. In M/s Satkar Logistics Pvt. Ltd. v. Ms. Gunjan Mittal, Company

Appeal (AT)(Insolvency) No. 285 of 2022, it was observed that the Hon'ble

Supreme Court, in Sabarmati Gas Ltd. v. Shah Alloys Ltd. [(2023) 3 SCC

229], held that unresolved account reconciliation amounts to a pre-existing

Company Appeal (AT)(Insolvency) No. 804 of 2025 7 of 19 dispute, and accordingly, dismissal of a Section 9 Application on this ground

was upheld. The Respondent claims that disputes arose in September, 2023

over fraudulent retention of corporate discounts and substandard goods,

leading to cessation of purchases. Debit notes were shared on 19.10.2024,

referencing earlier meetings. The Appellant allegedly ignored these and

instead issued a demand notice to initiate insolvency. Recent judgments,

including M/s Satkar Logistics Pvt. Ltd. (supra) affirm that ongoing account

disputes and unresolved differences justify rejection of a Section 9 Application

due to pre-existing disputes.

16. It is submitted that the Appellant, in its rejoinder, denied any prior

complaints regarding inferior goods, yet failed to disclose or explain sales

return entries amounting to ₹3,23,58,775/- reflected in its own ledger. This

concealment raises serious doubts about the Appellant's bona fides. As held

by the Hon'ble Supreme Court in Maxim India Integrated Circuit Design (P)

Ltd. v. Andappa (2025) 3 SCC 84 relying on Ramjas Foundation v. Union

of India (2010) 14 SCC 38 a party that withholds material facts is not entitled

to judicial relief.

17. The Appellant's conduct demonstrates a clear intent to misuse the IBC

as a recovery tool rather than a resolution mechanism. The invocation of the

IBC is improper where there are contested claims and counterclaims requiring

adjudication -- precisely the rationale given by the Adjudicating Authority

issued the Impugned Order. This is impermissible in view of the law laid down

Company Appeal (AT)(Insolvency) No. 804 of 2025 8 of 19 in Mobilox Innovations Pvt. Ltd. (supra) and S.S. Engineers y. Hindustan

Petroleum Corporation Ltd., (2022) 7 SCC 250.

Adjudicating Authority has correctly applied the test laid down in Mobilox Innovations Pvt. Ltd. (supra) - the dispute must meet the following

criteria i.e. the dispute must exist prior to the demand notice, be bona fide,

and not be spurious; require further examination; and be based on plausible

contention. All the above-mentioned criteria are clearly satisfied in the present

case. The Respondent's objections to quality and pricing were specific and

raised in good faith, backed by internal vouchers, vendor discount claims,

and warehousing expense records.

18. The payments made by the Respondent were toward invoices that were

not in dispute. This does not imply that the balance amount was admitted.

Furthermore, the unilateral rejection of the Respondent's claims by the

Appellant does not erase the existence of a genuine dispute.

19. The e-Way bills uploaded by the Respondent were genuine entries

corresponding to the admitted returns. The withdrawal of these bills from the

portal was a voluntary act to avoid further escalation, not an admission of

fabrication.

20. The present appeal is wholly misconceived and is liable to be dismissed

in limine.

Appraisal

21. We have heard both sides and also perused material placed on record.

Company Appeal (AT)(Insolvency) No. 804 of 2025 9 of 19

22. Appellant has raised the issue that whether a party anticipating

proceedings under IBC can issue a communication concocting a dispute,

which is unsupported by any evidence, just before issuance of formal demand

notice under IBC and whether that itself would be considered as a "pre-

existing dispute" under the IBC.

23. Respondent contends that the email dated 08.11.2023 sharing ledger

details was solely for the purpose of reconciliation, not an admission of debt.

The Appellant's own email dated 12.09.2024 acknowledges this by referring

to discrepancies identified during reconciliation, such as an unshared debit

note and TDS deduction. Thus, the exchange was part of ongoing account

settlement, not a conclusive admission of liability. On the other hand,

Appellant claims that the CD has argued that the accounts were shared only

for reconciliation purposes. However, the same in no manner changes the

nature of admission of ₹6,58,11,511/- by the CD as the difference between

the ledger of the Appellant and that of the CD is ₹27,264/- only.

24. Appellant contends that the judgment relied upon by the CD i.e. M/s

Satkar Logistics Pvt. Ltd. (supra) does not advance the case of the CD in

any manner as there is no failure to reconcile in the present case. In

pursuance to the said reconciliation of accounts from November, 2023 to July,

2024, the CD made part-payments amounting to ₹4,30,03,081/- against the

running account on first in first out basis in respect of the admitted debt. The

last payment was made on 09.07.2024, thereby leaving an admitted balance

of ₹2,28,35,693/-, which is the total outstanding against the 51 invoices

Company Appeal (AT)(Insolvency) No. 804 of 2025 10 of 19 raised between 01.08.2023 and 26.09.2023. Appellant claims that no

explanation has been given by the CD as to why the CD had released an

amount more than ₹4 crores if the accounts were not reconciled and also no

objections were raised by the CD from 08.11.2023 till 19.10.2024 regarding

the quality of goods, corporate discounts, or warehouse charges, neither were

any requests for return of goods were made. Further on 12.09.2024 at 12.46

pm, the Appellant sent a formal email demanding the balance dues to the

tune of ₹2,28,35,693/- and warned that legal action would be initiated if the

balance is not cleared. Instead of responding to the email dated 12.09.2024

or paying the already admitted dues, the CD on the same date i.e. 12.09.2024

at 04:07PM, uploaded fabricated E-way bills worth ₹1.06 Crores on the GST

portal on the very same day, purportedly showing return of goods. These E-

way bills were not accompanied by any invoices, delivery challans,

acknowledgment of return, or GST payment. Upon objection by the Appellant

vide email dated 13.09.2024, the CD admittedly withdrew the fabricated E-

way bills. The withdrawal, without any explanation, reinforces the spurious

nature of the E-way bills. Even then the CD did not respond to the email dated

12.09.2024 or the email dated 13.09.2024 for over a month. Subsequently,

on 19.10.2024, the CD sent an email for the first time alleging inferior quality

of goods, corporate discounts from Century Pulp and Paper, warehousing

costs, and other set-offs. This email, issued more than one month after the

email dated 12.09.2024 issued by the Appellant, and more than 11 months

after invoices were issued and admitted, is not supported by any evidence.

The documents attached with the emails i.e. "Journal Vouchers" dated

Company Appeal (AT)(Insolvency) No. 804 of 2025 11 of 19 01.10.2024, 30.03.2024, 26.03.2024 and 23.03.2024 were never raised by

the CD prior to 19.10.2024 and no document has been placed on record by

the CD to show otherwise. Further, it is claimed to be suspicious and without

any reason that the CD waited for more than a month from the issuance of

email 12.09.2024 to raise the purported back-dated Journal Vouchers which

clearly shows that the said Journal Vouchers were fabricated as an

afterthought to create a dispute against the outstanding invoices. None of the

purported "Journal Vouchers" were GST-compliant, nor were they shared ever

by CD with the Appellant from the allegations date of such journal vouchers

i.e. from March, 2024 till 19th October, 2024. The entire case of the CD rests

on alleged oral discussions and one on one meeting between the parties,

which itself demonstrates the falsity of the dispute set out by the CD. The CD

claims that the dispute arose way back in September 2023 when the CD

purportedly came to know that the Appellant had taken corporate discounts

from "Century Paper Mill" and basis that the CD stopped purchasing goods

from the Appellant. Appellant contends that no email, communication or

letter was ever issued by the CD between the period from 08.11.2023 (i.e. the

date when the ledger of CD showing the admitted dues of CD towards the

Appellant was shared by CD with the Appellant) till 19.10.2024 (i.e. the date

when the so-called dispute email was shared by CD with the Appellant for the

first time). There is no document which has been placed on record by the CD

that any dispute or any purported "debit notes" or even "Journal Vouchers"

were ever raised or given to the Appellant by the CD before 19.10.2024. The

entire narrative of CD is based on purported "Journal Vouchers" however they

Company Appeal (AT)(Insolvency) No. 804 of 2025 12 of 19 were not raised by the CD at any point of time prior to 19.10.2024. Further,

no reason or explanation has been provided by the CD as to why even after

issuance of email dated 12.09.2024 by the Appellant demanding payment of

outstanding dues, the CD failed to respond to the said email immediately and

send the purported "Journal Vouchers" instead of waiting for more than a

month to provide the same with email dated 19.10.2024 issued the CD

creating the Journal Vouchers as an afterthought to evade the admitted

liability.

25. It is the case of the CD during oral arguments and in the written

submissions (though not the pleaded case either before this Hon'ble Tribunal

or the Ld. Adjudicating Authority) that ledger placed on record for the period

between 01.04.2022 to 08.11.2023 shows entries pertaining to sales return

amounting to ₹3,23,58,775/-. However, the said entries pertain to the

invoices issued prior to 08.11.2023, and even after taking into account the

sales returns, the balance outstanding despite the sales return is

₹6,58,11,511/- as admitted in the CD's ledger [@ Pg 119/Appeal]. The sales

return entries in the ledger as highlighted by the CD does not relate to the

invoices which are outstanding for the period between 01.08.2023 to

26.09.2023. Further, the contention of the CD that ₹1,06,66, 456/- is to be

deducted towards "discount for bad quality" also does not find mention in the

ledger shared by the CD vide email dated 08.11.2023. Appellant claims that

by showing sales returns which are unrelated to the goods supplied against

the 51 invoices which remains outstanding the, CD in trying to mislead No

sales return entries are being showed by the CD post 08.11.2023 and the CD Company Appeal (AT)(Insolvency) No. 804 of 2025 13 of 19 have been duly making substantial payment against the outstanding liability

and no issues with respect to quality or debit notes were raised by the CD

post 08.11.2023 after the reconciliation of accounts between the parties.

26. Perusal of the material placed on record indicates that Section 8

demand notice was issued for ₹2,44,27,407/- on 25th October 2024. We

further note that prior to the demand notice the email placed on record

indicates that even on 19 October, 2024, the Respondent had raised disputes,

even though the Appellant claims that this was raised for the first time as per

this communication. Adjudicating authority dismissed Section 9 Petition due

to a pre-existing dispute, the relevant portion is extracted as below:

"9. The oral submissions of the parties advanced during hearing are considered and records carefully perused. It is evident from the CD's e-mail of 19.10.2024 that there were disputes pre-dating the notice issued by the OC under section 8 of the IBC. The disputes - relating to the OC holding on to the corporate discount instead of passing on to the CD, and the supply of inferior goods by the OC which remained to be lifted back by the OC in turn leading to the CD incurring cost on storage, were quantified in monetary terms and communicated to the OC prior to the issue of the notice under section 8 of the IBC. Thus, even prior to the demand notice of Rs.2,44,27,407 claimed by the OC, the CD communicated to the OC that Rs.12,13,714 was owed to it. Moreover, these claims of the CD form part of the Application filed by the OC, making it evident that the dispute was in the knowledge of the OC even as it sent the demand notice dated 25.10.2024 under section 8 of the IBC on 26.102.24 by speed post. In the rejoinder, the OC has attempted to counter the claims of the CD (which was in fact reiteration of the claims made in its e-mail of 19.10.2024), by mere denial of the same. The assertion, that the self-serving debit notes were not shared with the OC earlier, is evidently not correct since the e-mail of 19.102024 was available with it prior to the issue of the demand notice. Above all, it is noteworthy that no comments have been offered on the matter of pre-existing dispute by the OC either in its rejoinder or its oral submissions."

27. Furthermore, adjudicating authority has come to the following finding:

"In the present case, the contentious nature of claims is amply established by the prior dispute borne out by the CD's email dated 19.10.2024. These contentions, may require further detailed Company Appeal (AT)(Insolvency) No. 804 of 2025 14 of 19 examination, particularly concerning the issues of corporate discounts offered by M/s Century Paper & Pulp; supply of inferior quality of raw materials supplied by the OC; payments made in cash and also transfer through its sister concern by the CD; acknowledgement of these payments by the director of the OC in his own handwriting; expenses incurred towards warehouse charges by the CD etc.

However, summary jurisdiction of this Authority does not allow adjudication on such claims and counter-claims."

28. To find out the sustainability of the findings of Adjudicating Authority,

we first look into the provisions of Section 8 under the Code which is extracted

as below:

"Section 8:

(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, or 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 2 [payment] 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 2[payment] of the operational debt in respect of which the default has occurred."

29. The provisions of the Code are very clear that Corporate Debtor shall

within a period of ten days of the receipt of demand can bring to the notice of

the Operational Creditor about "existence of a dispute, if any, or record of the

pendency of the suit or arbitration proceedings filed before the receipt of such

notice or invoice in relation to such dispute" and this is what has happened in Company Appeal (AT)(Insolvency) No. 804 of 2025 15 of 19 this case, though the Appellant contends that the Corporate Debtor's belated

objections regarding quality issues and corporate discounts are

afterthoughts, unsupported by any contemporaneous evidence and

substantial payments were made post-reconciliation, indicating no genuine

dispute. Appellant claims that these are spurious or illusory disputes raised

only in response to a demand notice and are not valid as held under Mobilox

Innovations Pvt. Ltd. (supra). In this case the Section 8 demand notice was

issued for ₹2,44,27,407/- on 25.10.2024 and there are records to show that

on 19.10.2024 Respondent had raised disputes for quality, discounts etc.,

which is prior to the issue of the Section 8 demand notice and it is also raised

in its reply of Section 8 demand notice. Therefore, in the facts and

circumstances of the case, we find that there is a pre-existing dispute with

respect to the reconciliation of the accounts which is noted by even the

Adjudicating Authority and we do not find this dispute to be as spurious or

illusory.

30. We also note that in Sabarmati Gas Ltd. (supra), it was held that

unresolved account reconciliation amounts to a pre-existing dispute, and

accordingly, dismissal of a Section 9 Application on this ground was upheld. The Hon'ble Supreme Court in the case of Sabarmati Gas Limited (supra)

has held that failure of reconciliation of accounts qualifies as a pre-existing

dispute. The rejection of Section 9 application on the grounds of such "pre-

existing dispute" was upheld. The relevant portion of the judgment is

reproduced below:

Company Appeal (AT)(Insolvency) No. 804 of 2025 16 of 19 "

55. In this context the meaning of the word "reconciliation" is to be looked into. Going by Black's Law Dictionary, 10th Edition, the apt meaning suitable to the situation in relation to accounting, reads thus: "an adjustment of amounts so that they agree, especially by allowing for outstanding items". It is submitted by the learned counsel for the respondent that such a reconciliation had not taken place and also that indisputably, DRS was not formulated and approved. The aforesaid facts revealed from Annexure 40 together with the stand taken by the respondent in the letter dated 04.01.2013 (Annexure 36) would reveal the existence of a pre- existing dispute between the parties.

56. In the contextual situation it is only apposite to be remindful of the observation in Mobilox Innovations that in doing the act of separating the grain from chaff the Court need not to be satisfied that the defence is likely to succeed. It is enough that a dispute exists between the parties and in other words, what is to be seen is whether there was a plausible contention requiring investigation for the purpose of adjudication. Taking note of the nature of the dispute of the respondent as referred hereinbefore in respect of the claim made by the appellant, we do not find any reason to disagree with the concurrent findings of the Tribunals that there existed a 'pre-existing dispute' between the parties before the receipt of demand notice under Section 8 IBC. In other words, the dismissal of the application under Section 9 IBC on the ground of 'pre-existing dispute' cannot be held to be patently illegal or perverse. We also do not find any reason, in the facts and circumstances, to hold that the case set up by the respondent was a patently feeble legal argument. At any rate, we are not inclined to brush aside the case of the respondent as spurious.

57. We may hasten to add here that we shall not be understood to have held that the dispute set by the respondent regarding the dues is ultimately to be upheld. Certainly, when the expression 'pre- existing dispute' is used it will only indicate the existence of a dispute prior to the receipt of a demand notice under Section 8 IBC, and the correctness or its truthfulness is a matter of evidence. In short, the respondent has succeeded in raising a dispute describable as 'pre- existing dispute'. In that view of the matter once we find that the Tribunals have rightfully held that there existed a 'pre-existing dispute' between the parties there cannot be an order of remand of the matter to the Tribunal for reconsideration of Section 9 application under IBC."

31. Appellant has placed its reliance on the judgement in Surendra

Sancheti (supra), wherein this Appellate Tribunal held as follows:

"Coming to our analysis and findings, we notice that no material has been placed on record by the Corporate Debtor to show that they had categorically rejected the outstanding dues claimed by the Operational Creditor prior to issue of demand notice. There is no Company Appeal (AT)(Insolvency) No. 804 of 2025 17 of 19 evidence of any outright denial of the liability to pay which has been placed on record by the Corporate Debtor. Furthermore, we notice that Corporate Debtor while admitting the outstanding debt had also admitted in the same breath that they were working to promote the global presence of the Operational creditor in India which affirms that there were no differences between them with regard to the agreement basis which they were conducting their business operations. When we look at the impugned order, we find that the Adjudicating Authority has considered the entire gamut of facts holistically. We are also satisfied with the findings of the Adjudicating Authority that facts on record speak loud and clear that the Corporate Debtor/Appellant all along admitted that it owed an operational debt to the Operational Creditor which amount was in excess of the threshold limit until their reply to the Section 8 demand notice.

When the operational debt had already arisen and become due and invoices raised were not specifically disputed there is nothing on record which detracts from the operational debt having become due and payable. We also notice that debit notes notwithstanding, the Appellant had acknowledged that they were liable to pay the outstanding operational debt. The Corporate Debtor never disputed or questioned the offer made by the Operational Creditor to look into the debit notes for making appropriate credit adjustments. This puts a serious question mark on the bona-fide of the bogey of pre-existing disputes being subsequently raised by the Corporate Debtor. The alleged disputes claimed by the Corporate Debtor are feeble and not supported by credible evidence. In sum, no real pre-existing dispute is discernible. There is no good ground to establish any real and substantial pre-existing dispute which can thwart the admission of section 9 application against the Corporate Debtor. The Adjudicating Authority therefore does not appear to have committed any error in holding that all requisite conditions necessary to trigger CIRP under Section 9 stands fulfilled."

32. We note that above case was distinguishable for the reason that the

above order notes that "we notice that no material has been placed on record

by the Corporate Debtor to show that they had categorically rejected the

outstanding dues claimed by the Operational Creditor prior to issue of demand

notice." But in the present case it is being disputed and issues of

reconciliation are being raised.

Conclusion and Orders

33. In the facts and circumstances of the present case we do not find any

infirmity in the findings of the Adjudicating Authority. We cannot come to a

Company Appeal (AT)(Insolvency) No. 804 of 2025 18 of 19 conclusion that it is a spurious and a non-existent pre-existing dispute. In

the summary proceedings we cannot adjudicate on the issue of the dispute

between the parties which is pre-existing one. Accordingly, we dismiss the

appeal under the Code, with the liberty for the Appellant to pursue his

remedies as available under the law. Appeal disposed of accordingly. No

orders as to costs.

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Arun Baroka] Member (Technical) New Delhi.

August 29, 2025.

pawan

Company Appeal (AT)(Insolvency) No. 804 of 2025 19 of 19