2017 (7) TMI 1360 - Tri - Insolvency and Bankruptcy

NCLT Admits CIRP Petition, Emphasizes Code Compliance

M/s. Arjun Chemicals Pvt. Ltd. Versus M/s. MSP Paper Mill Pvt. Ltd.

The National Company Law Tribunal admitted a petition for Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016, ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The Affidavit has been filed in compliance with the provisions of Section 9(3)(b) of the I&B Code, 2016 stating therein that the Corporate Debtor has not given any notice in relation to any dispute pertaining to the unpaid operational debt. The Counsel submitted that four cheques dated 24.9.2011, 29.9.2011, 7.10.2011 and 2.11.2011 were issued by the Corporate Debtor which got bounced. Based on this, the Counsel submits that the same may be treated as an evidence that Corporate Debtor has not made payments of the outstanding debt because the Banker did not issue the required certificate. The Petitioner has fulfilled the requirement of law for admission of the Petition. Petition admitted - moratorium shall have effect from the date of this Order till the completion of corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code, 2016. Issues:1. Admission of application for Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016.2. Non-payment of outstanding debt by the Corporate Debtor.3. Appointment of Interim Resolution Professional (IRP).4. Declaration of moratorium and its implications.5. Compliance with provisions of the Insolvency and Bankruptcy Code, 2016.Admission of Application for Corporate Insolvency Resolution Process:The case involves a petition transferred from the High Court to the National Company Law Tribunal seeking initiation of the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016. The petitioner claimed that the Corporate Debtor failed to pay an outstanding debt of Rs. 12,31,581 for the supply of paper chemicals. Despite partial payment directed by the High Court, a significant amount remained unpaid. The Tribunal found the petition compliant with the law and admitted it, ordering the commencement of the resolution process within 180 days.Non-Payment of Outstanding Debt:The petitioner submitted evidence of bounced cheques issued by the Corporate Debtor, indicating non-payment of the debt. The Corporate Debtor did not raise any dispute regarding the unpaid operational debt, fulfilling the requirements of Section 9(3)(b) of the Insolvency and Bankruptcy Code, 2016. The Tribunal acknowledged the evidence presented and proceeded to admit the petition for insolvency resolution.Appointment of Interim Resolution Professional (IRP):The Tribunal appointed Mr. Venkataramanarao Nagarajan as the IRP, as proposed by the Operational Creditor. Mr. Nagarajan's appointment was based on his eligibility and absence of pending disciplinary proceedings. He was directed to take immediate charge of the Corporate Debtor's management and initiate the resolution process as per the prescribed procedures.Declaration of Moratorium and Its Implications:A moratorium was declared from the date of the order until the completion of the corporate insolvency resolution process, in accordance with Section 14 of the Insolvency and Bankruptcy Code, 2016. The moratorium prohibited various actions against the Corporate Debtor, including legal proceedings, asset transfers, and recovery actions. Essential supplies to the Corporate Debtor were protected during this period.Compliance with Provisions of the Insolvency and Bankruptcy Code, 2016:The IRP was instructed to comply with specific sections of the Code, including responsibilities related to claims submission, asset management, and cooperation with the Corporate Debtor's directors and associated persons. The Tribunal emphasized the importance of adherence to the Code's provisions for a smooth resolution process.This detailed analysis of the judgment highlights the key issues addressed by the National Company Law Tribunal in the case, providing a comprehensive understanding of the legal proceedings and decisions made.