If Genuine Pre-Existing Dispute With Regard To Operational Debt Is Established, Petition U/S 9 Of IBC Must Be Rejected: NCLAT

The National Company Law Appellate Tribunal (NCLAT) ruled that a genuine pre-existing dispute regarding operational debt must lead to the rejection of a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC). The case involved an operational creditor who filed a petition for insolvency resolution against a debtor. The debtor argued that there was a pre-existing dispute over the debt, which the NCLAT found to be genuine. The tribunal emphasized that the IBC process should not be used to resolve disputes that are not purely financial in nature. This ruling reinforces the need for clear and undisputed claims in insolvency proceedings.