2019 (1) TMI 1775 - Tri - Insolvency and Bankruptcy

Tribunal admits petition under Section 9 of Insolvency and Bankruptcy Code, declares moratorium

Windson Chemical (P.) Ltd. Versus Jason Dekor (P.) Ltd.

The tribunal found the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 to be maintainable. The petition was admitted, and a ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Service of demand notice - HELD THAT:- It is found that on withdrawal of the first demand notice, which as per the applicant is not as per the rule, the applicant issued fresh demand notice on 09.11.2017 in form No. 3 at the registered office address of the company. Since the same was returned undelivered, the applicant sent the demand notice through e-mail at the e-mail address of the company available in the Master Data of Ministry of Corporate Affairs. Hence, in view of this development, service of notice is found to be complete - As regards maintainability of the petition is concerned, Rule 5 (2) (b) of the Insolvency and bankruptcy (Application to Adjudicating Authority) Rules, 2016 allows service of demand notice by way of e-mail. The issue with regard to the prior dispute as raised by the corporate debtor vide vernacular letter dated 01.03.2016, it is found that no such letter has been received by the applicant in view of the affidavit executed by the concerned courier agency certifying that on such date no letter was sent to the applicant through their agency by the corporate debtor - Thus, the corporate debtor failed to prove the issue of prior dispute. It is the applicant who provided evidence that no such dispute has been raised earlier by the corporate debtor vide letter dated 01.03.2016 which appears to be fabricated one. On perusal of the documents filed by the operational creditor it is evident that the corporate debtor defaulted in making payments. The petition filed under Sections 8 & 9 of IB code is complete in all respects - Petition admitted - moratorium declared. Issues Involved:1. Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.2. Service of demand notice.3. Existence of prior dispute.4. Admission of the petition and declaration of moratorium.Issue-wise Detailed Analysis:1. Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016:The petitioner, M/s. Windson Chemical Private Limited, sought initiation of the corporate insolvency resolution process against M/s. Jason Dekor Private Ltd. under Section 9 of the Insolvency and Bankruptcy Code, 2016. The respondent argued that the petition was not maintainable due to the absence of a valid demand notice. The tribunal found that the petition was complete in all respects and that the petitioner was the operational creditor. The corporate debtor had issued cheques for the amount due, which were dishonored, indicating an admission of debt.2. Service of demand notice:The respondent contended that no demand notice was served upon them, making the petition invalid. The tribunal noted that the first demand notice dated 05.08.2017 was withdrawn and replaced with a fresh notice dated 09.11.2017, which was returned undelivered. Subsequently, the petitioner sent another notice on 09.12.2017 via email to the address listed in the Ministry of Corporate Affairs' Master Data. Rule 5(2)(b) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, allows service of demand notice by email, making the service of notice complete and valid.3. Existence of prior dispute:The respondent claimed a prior dispute existed, citing a vernacular letter dated 01.03.2016. However, the tribunal found no evidence that the letter was received by the petitioner. The petitioner provided an affidavit from the courier agency confirming that no such letter was sent on the claimed date. The tribunal concluded that the letter was fabricated and that the respondent failed to prove the existence of a prior dispute.4. Admission of the petition and declaration of moratorium:The tribunal admitted the petition and declared a moratorium under Section 14 of the Code. The moratorium prohibits the institution or continuation of suits, transferring or disposing of assets, and actions to foreclose or recover property. The tribunal appointed Mr. Pinakin Surendra Shah as the Interim Insolvency Resolution Professional (IRP) and directed him to make a public announcement of the initiation of the Corporate Insolvency Process and call for submission of claims under Section 15 of the Code. The order of moratorium will remain effective until the completion of the corporate insolvency resolution process or until a resolution plan is approved or an order for liquidation is passed.Conclusion:The tribunal found the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, to be maintainable, with valid service of demand notice and no prior dispute. The petition was admitted, and a moratorium was declared, with the appointment of an IRP to proceed with the corporate insolvency resolution process.