In Brief
A coal supplier filed an insolvency application against a buyer under the Insolvency and Bankruptcy Code for unpaid invoices. The buyer disputed the debt, claiming the coal supplied was defective in quality (lower calorific value and excess moisture) and caused boiler damage. The buyer had complained in emails within days of delivery and filed civil suits for damages. The Supreme Court held that a "pre-existing dispute" under the Code requires only a plausible contention meriting investigation—not proof of likely success. Accepting goods does not strip buyers of rights to claim breach of supply conditions and seek price reduction under the Sales of Goods Act. The Court found contemporaneous quality complaints and lab evidence sufficient to establish a genuine dispute, setting aside the lower tribunals' orders.
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