Tribunal rules in favor of Mahavir Traders in Insolvency Code case

The Tribunal found in favor of the petitioner, Mahavir Traders, in a case involving the service of a demand notice under Section 8 of the Insolvency and Bankruptcy Code. The Tribunal determined that the demand notice was properly served, no genuine dispute existed between the parties at the time of notice, and the petition was not barred by limitation. As a result, the Tribunal admitted the petition, declared a moratorium under Section 14 of the Code, appointed an Interim Resolution Professional, and outlined further steps for the insolvency resolution process.

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Issues Involved:
1. Whether the petitioner served the demand notice to the respondent under Section 8 of the Code before filing the petitionRs.
2. Whether there is an existence of dispute between the partiesRs.
3. Whether the petition is barred by limitationRs.

Issue-wise Detailed Analysis:

1. Whether the petitioner served the demand notice to the respondent under Section 8 of the Code before filing the petitionRs.

The petitioner, Mahavir Traders, filed an application in Form 5 under Rule 6(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The demand notice was sent by Speed Post on 11.04.2018 and delivered on 12.04.2018. The respondent contested the notice, claiming it was sent by "Blue Apple Trad." and not the petitioner. However, the Tribunal found that the tracking report confirmed delivery to the respondent and dismissed the discrepancy as immaterial. The Tribunal concluded that the demand notice was properly served, and the petition was filed after the required 10-day period, thus deciding this issue in favor of the petitioner.

2. Whether there is an existence of dispute between the partiesRs.

The respondent argued that a dispute existed over the transactions and payments, citing a settlement in 2015 and subsequent payments totaling Rs. 28 lakhs. The respondent also claimed to have supplied yarn to the petitioner for the outstanding balance. However, the Tribunal found no evidence of any communication regarding the settlement or dispute prior to the demand notice. The post-dated cheques issued by the respondent in 2018 for Rs. 54,39,956/- were dishonored, and the Tribunal noted the lack of explanation for issuing these cheques if the dispute had been settled in 2015. The Tribunal also questioned the authenticity of the respondent's ledger entries and invoices, noting the petitioner's evidence, including an affidavit from a driver denying the delivery of goods. The Tribunal concluded that no genuine dispute existed at the time the demand notice was issued, and the respondent's defense was not credible.

3. Whether the petition is barred by limitationRs.

The last payment made by the respondent was Rs. 2 lakhs on 18.05.2017. The petition was filed on 01.05.2018, within the three-year limitation period. Therefore, the Tribunal held that the petition was not barred by limitation.

Conclusion:

The Tribunal found the petition to be complete in all respects and admitted it. The Tribunal declared a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, and appointed Mr. Anjum Goyal as the Interim Resolution Professional (IRP). The IRP was directed to take control of the corporate debtor's assets, manage its affairs, and comply with all relevant provisions of the Code. The Tribunal also directed the IRP to make a public announcement, constitute a committee of creditors, and submit regular progress reports to the Tribunal.

The order of moratorium will remain in effect until the completion of the corporate insolvency resolution process or until further orders. The judgment was communicated to both parties, and a copy was sent to the IRP.

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