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CS Professional · Corporate Restructuring, Valuation and Insolvency · Application for Corporate Insolvency Resolution Process

Before Tarang Plastics Ltd filed its Section 9 application against Mehta Polymers Pvt Ltd, Mehta had sent Tarang an email disputing the quality of goods covered by the invoice. Tarang's affidavit stated that no dispute notice had been received. Which outcome follows under Section 9(5)?

The application is liable to be rejected. Section 9(5)(ii)(d) requires rejection where the operational creditor has received a notice of dispute. The affidavit saying no dispute was received cannot override the actual email, and part payment is irrelevant to this ground.

  1. AThe application is admitted because the affidavit is conclusive
  2. BThe application is admitted but the dispute is referred to arbitration
  3. CThe application is rejected only if Mehta also pays part of the debt
  4. DThe application is liable to be rejected because notice of dispute was received by the operational creditorCorrect

Explanation

Section 9(5)(ii)(d) requires rejection where a notice of dispute has been received by the operational creditor. The affidavit under Section 9(3)(b) must be truthful and is not conclusive against the facts. Part payment is not a condition for rejection on this ground.

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