In Brief
An operational creditor (Sabarmati Gas) sought initiation of corporate insolvency proceedings against Shah Alloys Limited under Section 9 of the IBC. The corporate debtor disputed the claim, asserting a pre-existing dispute over gas supply shortfalls and losses from disconnection, and also raised a limitation defence. The Supreme Court held that while a statutory suspension of proceedings under SICA (Section 22) can constitute sufficient cause for condonation of delay under the Limitation Act, the core issue was whether a pre-existing dispute existed. The Court found that the corporate debtor had indeed raised a plausible, non-spurious dispute prior to receiving the demand notice. Accordingly, the Court upheld dismissal of the insolvency application at the threshold, directing the parties to pursue their dispute through the pending arbitration rather than the insolvency route.
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