2019 (1) TMI 1709 - Tri - Insolvency and Bankruptcy

Tribunal denies debtor's moratorium claim, initiates insolvency resolution process for non-payment of rent.

The Tribunal rejected the Corporate Debtor's claim of a six-year moratorium agreement due to lack of evidence, leading to the initiation of the Corporate ... Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - whether the Petitioners accepted a moratorium for 6 year or not? - HELD THAT:- It is on record that the Corporate Debtor has taken the property of the Petitioners for rent and they were making payments towards rent up to June 2017. According to the Petitioners, the Corporate Debtor failed to pay the rent from July 2016 and whatever the payments made in part was appropriated towards rent dues. The main issue in the matter is as to whether the Petitioners accepted a moratorium for 6 year or not. Though the Corporate Debtor say so, there is no documentary proof filed to that effect. In the absence of any documentary proof about accepting the moratorium. the submissions of the Corporate Debtor are to fail. It is deemed that the Corporate Debtor has failed in making payment of rents as no substantial document is placed on record to show the existence of moratorium between the parties regarding the Rent, therefore, the Petition is admitted. Petition admitted - moratorium declared. Issues Involved:Petition filed under section 9 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor for non-payment of rent.Analysis:Issue 1: Background and Ownership DisputeThe Petitioners, joint owners of a property rented to the Corporate Debtor, alleged non-payment of rent from July 2016 onwards, leading to a total outstanding amount of Rs. 30,15,370 by June 2017. The Corporate Debtor claimed to have paid rent till December 2017 and cited a moratorium agreement for six years due to operational slowdown, which the Petitioners denied.Issue 2: Acceptance of MoratoriumThe main contention revolved around whether the Petitioners accepted a moratorium for six years as claimed by the Corporate Debtor. Lack of documentary proof supporting the existence of such an agreement led the Tribunal to reject the Corporate Debtor's submissions, concluding that the Corporate Debtor failed to make rent payments without evidence of a moratorium.Issue 3: Insolvency Resolution ProcessConsidering the default in debt payment and absence of substantial proof regarding the moratorium, the Tribunal found the Petitioners' case suitable for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. The Tribunal ordered the commencement of the process, appointing an Interim Resolution Professional to oversee the proceedings.Issue 4: Moratorium and ProhibitionsA moratorium was declared from the date of the order until the completion of the insolvency resolution process, prohibiting various actions against the Corporate Debtor, including legal proceedings, asset transfers, and recovery actions. Essential goods or services supply to the Corporate Debtor was mandated to continue during this period.Issue 5: Compliance and CooperationDirectors, promoters, and management associates of the Corporate Debtor were directed to cooperate with the appointed Interim Resolution Professional and ensure compliance with the provisions of the Insolvency and Bankruptcy Code, 2016.Conclusion:The Tribunal admitted the petition, initiated the Corporate Insolvency Resolution Process, declared a moratorium, and directed parties to comply with the legal requirements for the resolution process.