Adjudicating Authority Can't Venture Into Appreciation Of Merit Of Pre-Existing Dispute, Not Empowered By Section 9 IBC: NCLAT

The NCLAT, citing Mobilox Innovations Pvt Ltd vs. Kirusa Software Pvt Ltd and Raj Ratan Babulal Agarwal vs. Solar Tech's India Pvt Ltd, emphasized that the adjudicating authority under Section 9 of the IBC shouldn't delve into the merits but solely ascertain the existence of a plausible dispute. \r

However, it found the Adjudicating Authority overstepped its jurisdiction by evaluating the defense raised by the Corporate Debtor instead of simply determining a dispute's existence. Not considering the Corporate Debtor's final bill before the demand notice, the NCLAT held that the transaction couldn't be split into two separate contracts. \r

With a pre-existing dispute, the summary procedure under Section 9 wasn't applicable. Thus, it dismissed the Operational Creditor's Section 9 petition.