Factors to be Determined by Adjudicating Authority – When Examining an Application U/s 9 of IBC

The Adjudicating Authority, when examining an application under Section 9 of the Insolvency and Bankruptcy Code, will have to determine:

  • Whether there is an operational debt, as defined, exceeding Rs. 1 lakh? (Section 4 of the IBC).
  • Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? And
  • Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute?

If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9 of the IBC, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act. Transmission Corporation of Andhra Pradesh Limited v. Equipment Conductors and Cables Ltd., (2019) 12 SCC 697.

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