In Brief
Mobilox Innovations, a telecom services company, hired by Star TV for conducting tele-voting, subcontracted work to Kirusa Software and then withheld payment after alleging Kirusa had breached their confidentiality agreement (NDA) by disclosing project details. Kirusa filed for insolvency in 2016 claiming Rs 20 lakhs in unpaid operational debt. The Tribunal rejected Kirusa's application, finding the debt was disputed. The Supreme Court allowed Kirusa's appeal, holding that a genuine dispute exists. The Court clarified that a 'dispute' need not involve pending litigation but can be any plausible contention requiring investigation, even regarding collateral matters like NDA breach. The Adjudicating Authority must reject insolvency applications if timely notice of a genuine dispute is received from the debtor, but cannot mechanically do so without assessing the substance and genuineness of the dispute raised.
The lawyer headnote and full judgment text are available to registered users.