Tribunal Orders CIRP for Defaulted Company Over Steel Sheets Payment Dispute

The Tribunal initiated Corporate Insolvency Resolution Process (CIRP) against the Respondent company due to default in payment for CRGO electrical steel sheets. Despite the Respondent's argument of the notice being time-barred, the Tribunal found in favor of the Petitioner, establishing debt and default. Consequently, CIRP was initiated, imposing a moratorium under Section 14 of the Insolvency and Bankruptcy Code. An interim resolution professional was appointed, and the case was scheduled for further proceedings after the IRP's report submission within 30 days.

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Issues:
Petition seeking to initiate CIRP against the Respondent company for default in payment.

Analysis:
The petition was filed by the operational creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the corporate debtor for an alleged default in settling the amount towards the supply of CRGO electrical steel sheet. The operational creditor provided details of transactions leading to the petition, including advance payments made by the corporate debtor and invoices issued by the operational creditor. The debt arose due to non-payment of the invoices along with interest. A notice under Section 8 of the Insolvency and Bankruptcy Code was sent, followed by a reply from the corporate debtor alleging the notice was time-barred. Despite multiple notices, the corporate debtor did not respond, leading to the matter being proceeded ex parte.

The counsel for the petitioner cited relevant decisions by the High Court and Supreme Court in favor of the petitioner, arguing that the matter was within the period of limitation based on the confirmation of outstanding amounts by the corporate debtor. After hearing the arguments and examining the documents, the Tribunal found that the operational creditor had established the existence of debt and default on the part of the corporate debtor. Since the corporate debtor did not defend the arguments, the Tribunal initiated CIRP against the corporate debtor with immediate effect.

A moratorium under Section 14 of the Code was imposed, preventing the institution of suits, transfer of assets, enforcement of security interests, and recovery of property from the corporate debtor. Essential goods or services supply was not to be interrupted during the moratorium period. An interim resolution professional (IRP) was appointed to oversee the resolution process, and the Applicant was directed to deposit a sum to cover immediate expenses. The IRP was required to file a report within 30 days, and the case was renotified for further proceedings.

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