Operational Creditor's Petition Admitted: Default Found, Moratorium Imposed

The tribunal admitted the operational creditor's petition under Section 9 of The Insolvency and Bankruptcy Code, 2016, finding the respondent in default of a significant amount without raising any dispute. The tribunal established the existence of operational debt and default in payment, leading to the appointment of an interim resolution professional and declaration of a moratorium. The moratorium prohibits actions against the corporate debtor, initiating the insolvency resolution process in compliance with the Code.

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Issues:
1. Application under Section 9 of The Insolvency and Bankruptcy Code, 2016.
2. Existence of operational debt and default in payment.
3. Admissibility of the petition and appointment of an interim resolution professional.
4. Declaration of moratorium and initiation of the insolvency resolution process.

Issue 1: Application under Section 9 of The Insolvency and Bankruptcy Code, 2016
The operational creditor filed a petition under Section 9 of The Insolvency and Bankruptcy Code, 2016, along with Rule 6 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The operational creditor, a partnership firm, alleged that the respondent, a private limited company, was in default of a significant amount along with interest. The respondent had not raised any dispute regarding the outstanding dues, and the operational creditor had issued a demand notice under section 8 of the Code.

Issue 2: Existence of operational debt and default in payment
The operational creditor detailed the transactions with the respondent and its sister concern, indicating a substantial outstanding amount. Despite reminders and promises from the respondent to clear the dues, the operational creditor did not receive the payments. The respondent admitted the outstanding amount but failed to settle it. The operational creditor established the debt, occurrence of default, and non-payment by the corporate debtor, meeting the requirements of the Insolvency & Bankruptcy Code.

Issue 3: Admissibility of the petition and appointment of an interim resolution professional
The respondent did not file a reply despite opportunities and adjournments, leading to the closure of the right to file a reply. The applicant issued a demand notice under section 8 of the Code, which the respondent did not dispute. The tribunal found the petition complete and in compliance with the necessary documentation, including invoices, demand notices, and statements. Citing a Supreme Court judgment, the tribunal concluded that the operational debt was due and payable, fulfilling the requirements of the Insolvency & Bankruptcy Code. Consequently, the tribunal admitted the petition and declared a moratorium, appointing an interim resolution professional.

Issue 4: Declaration of moratorium and initiation of the insolvency resolution process
The tribunal, in line with the provisions of the Insolvency & Bankruptcy Code, declared a moratorium, prohibiting certain actions against the corporate debtor. It directed the interim resolution professional to make a public announcement and call for submission of claims. The moratorium would remain in effect until the completion of the insolvency resolution process or until a resolution plan is approved or liquidation is ordered. The tribunal appointed an interim resolution professional and communicated the order to the relevant parties, ensuring compliance with the insolvency resolution process.

This detailed analysis of the judgment highlights the key legal aspects, including the application under Section 9 of the Code, the establishment of operational debt and default, the admissibility of the petition, and the declaration of moratorium for initiating the insolvency resolution process.

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