Tribunal Rules in Favor of Creditor in Debt Dispute Case

The Tribunal found in favor of the Operational Creditor in a case against the Corporate Debtor for non-payment of debt arising from a failed coal supply agreement. The Corporate Debtor failed to fulfill its obligations despite admitting liability and making only a partial payment. With no dispute raised, the Tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process. The Registry was instructed to appoint an Insolvency Resolution Professional, declare a moratorium, and commence the resolution process as per the Insolvency and Bankruptcy Code.

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Issues: Petition under Section 9 of the Insolvency and Bankruptcy Code by Operational Creditor against Corporate Debtor for non-payment of debt.

Analysis:

1. The Petitioner filed Form No. 5 under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016 as an "Operational Creditor" invoking Section 9 of the Insolvency and Bankruptcy Code.

2. The Form detailed the operational debt with the principal amount in default and interest claimed.

3. The Corporate Debtor was identified as M/S. Fieldspares Sales & Services Pvt. Ltd. with its registered office address in Nagpur, Maharashtra.

4. The nature of the debt arose from the need for the supply of thermal coal by the Operational Creditor from the Debtor.

5. A Work Order was issued by the Petitioner to the Debtor for the supply of coal to ISMT based on an offer made by the Debtor to ISMT.

6. ISMT made an advance payment of 50% of the contract price for the material, securing it with a Post Dated Cheque and Bank Guarantees.

7. Despite the advance payment, the Debtor failed to supply the coal, breaching the Work Order by not reinstating the securities.

8. The Petitioner requested the coal supply and refund of the advance amount, but the Corporate Debtor failed to pay the debt.

9. Emails and letters from the Director of the Debtor admitted the liability to refund the advance amount.

10. A partial payment was made by the Corporate Debtor to the Operational Creditor.

11. Demand Notices were issued under the Insolvency and Bankruptcy Code, with no dispute raised by the Corporate Debtor.

12. Bank account statements showed no payment by the Corporate Debtor post a certain date.

13. The non-appearance or communication of the Corporate Debtor indicated a lack of defense regarding the outstanding amount.

14. The Tribunal found the debt to be an "Operational Debt" with a default on the part of the Corporate Debtor.

15. The Petitioner provided evidence of the advance payment against the goods to be supplied, invoices raised, and non-payment by the Corporate Debtor.

16. The notice under Section 8(2) of the Code lapsed without any dispute raised by the Respondent.

17. The Petition was admitted due to non-receipt of the outstanding debt by the Operational Creditor and completion of prescribed formalities.

18. The Registry was directed to refer the matter to the Insolvency and Bankruptcy Board of India for the appointment of an Insolvency Resolution Professional.

19. Moratorium under Section 14 of the Code was declared, prohibiting legal actions against the Debtor while ensuring the supply of essential goods or services.

20. The next step involved the Public Announcement of the Corporate Insolvency Resolution Process by the appointed IRP.

21. The IRP was tasked with duties under Section 18 of the Code and was required to update the Bench on the progress within 30 days.

22. Compliance with the Resolution Plan and other provisions of the Code was mandated for the IRP, with regular progress reports to be submitted.

23. The Petition was officially admitted, commencing the Corporate Insolvency Resolution Process from the date of the Order.

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