What will be the consequence if Demand of Debt is disputed ?

If demand of debt is disputed and such dispute has been raised before the issuance of notice under section 8 of the Insolvency and Bankruptcy Code, 2016, the application shall not be admitted as the Adjudicating Authority is not empowered to go into the dispute. Thus, application can be admitted only if the demand of debt is undisputed. The Supreme Court has categorically dealt with the definition of 'dispute' in the matter of 'Mobilox Innovations Private Limited v. Kirusa Software Private Limited' by inserting the test of 'plausible contention' while analyzing the existence of dispute. The Supreme Court also clarified that the moonshine defence raised for the very first time by the corporate debtor after the service of the demand notice under section 8 of the Code does not qualify as 'dispute' within the definition of 'dispute' as per section 5(6) of the Code.