In Brief
A company (KCPL) received an arbitral award against it for Rs 1.71 crores and subsequently filed a Section 34 petition to challenge the award. The creditor then initiated insolvency proceedings under the Code. The Supreme Court held that a pending Section 34 petition constitutes a 'dispute' of the operational debt, preventing insolvency proceedings. The Code cannot bypass debt adjudication under the Arbitration Act. A dispute need not be likely to succeed; it need only be plausible and not spurious. Cross-claims pending in the arbitral challenge further support the disputed nature. The Court reversed the lower tribunals and allowed the appeals, holding insolvency applications must be rejected when disputes exist.
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