Application For Initiating CIRP Has To Be Rejected If A Dispute Truly Exists In Fact And Is Not Spurious, Hypothetical Or Illusory: Supreme Court

The Supreme Court observed that adjudicating authority has to reject an application seeking initiation of Corporate Insolvency Resolution Process under Section 9 of Insolvency and Bankruptcy Code, if a dispute truly exists in fact and is not spurious, hypothetical or illusory.The bench of Justices RF Nariman and BR Gavai observed that, at this stage, the authority is not required to be. The Supreme Court observed that adjudicating authority has to reject an application seeking initiation of Corporate Insolvency Resolution Process under Section 9 of Insolvency and Bankruptcy Code, if a dispute truly exists in fact and is not spurious, hypothetical or illusory. Thereafter, as per the provisions of Section 9 of the IBC, after the expiry of the period of 10 days from the date of delivery of notice or invoice demanding payment under sub­section of Section 8 and if the "Operational Creditor" does not receive payment from the "Corporate Debtor" or notice of the dispute under sub­ section of Section 8 of the IBC, the "Operational Creditor" is entitled to file an application before the adjudicating authority for initiating the Corporate Insolvency Resolution Process. It is thus clear that once the "Operational Creditor" has filed an application which is otherwise complete, the adjudicating authority has to reject the application under Section 9 of IBC, if a notice has been received by "Operational Creditor" or if there is a record of dispute in the information utility.