2019 (1) TMI 1830 - Tri - Insolvency and Bankruptcy

Tribunal admits application for insolvency resolution process, appoints IRP, declares moratorium.

The tribunal found the corporate debtor in default of the debt claimed by the operational creditor, leading to the admission of the application and ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - demand notice sent by Operational Creditor was returned as 'refused by recipient' - existence of debt and dispute or not - HELD THAT:- A reply has been given by the corporate debtor to the operational creditor wherein it has been stated that the corporate debtor is sorry for taking more time to pay and given the troubles, it has been assured that the corporate debtor will pay the amount definitely, which is a clear confirmation of the outstanding debt. Therefore, the operational creditor has established that his claim is genuine, and there is default on the part of the corporate debtor. The operational creditor has fulfilled all the requirements of law for admission of the application. This Bench is satisfied that the corporate debtor has committed default in making payment of the outstanding debt claimed by the operational creditor. Application admitted - moratorium declared. Issues Involved:1. Non-payment of debt by the corporate debtor.2. Authority to file the application.3. Quality of goods supplied.4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code, 2016 (I&B Code, 2016).Issue-wise Detailed Analysis:1. Non-payment of Debt by the Corporate Debtor:The operational creditor claimed a total sum of USD 41,321.30, which the corporate debtor failed to pay. The debt arose from the supply of fruits between February 2013 and January 2015, with Invoice No. 214256 dated August 4, 2014, remaining unpaid. Multiple communications from the corporate debtor assured payment, confirming the debt's existence and the corporate debtor's acknowledgment of the outstanding amount. The operational creditor also issued a winding-up notice under sections 433 and 434 of the Companies Act, 1956, and a demand notice under section 8 of the I&B Code, 2016, which the corporate debtor refused to accept. The tribunal found these communications sufficient to establish the debt's validity and the corporate debtor's default.2. Authority to File the Application:The corporate debtor contested the authorization of the individual filing the application, arguing it was improper. The tribunal referred to a board resolution dated September 8, 2017, which authorized Mr. M. Armugam to initiate the insolvency process. The tribunal found this authorization valid and in accordance with the law, dismissing the corporate debtor's argument. The tribunal also noted that the corporate debtor's argument was contradictory, as it both challenged and relied on the same board resolution.3. Quality of Goods Supplied:The corporate debtor claimed that the non-payment was due to the poor quality of goods supplied, specifically mentioning damaged and overripe apples. However, the tribunal found no documentary evidence supporting this claim. The operational creditor rebutted this by highlighting discrepancies in the corporate debtor's submissions, such as referring to different containers. The tribunal concluded that the quality issue was raised spuriously and rejected the corporate debtor's claim.4. Compliance with Procedural Requirements:The operational creditor complied with section 9(3)(b) and (c) of the I&B Code, 2016, by filing a detailed affidavit and providing necessary documents, including a bank certificate and statement of accounts. The tribunal found that the operational creditor met all legal requirements for admitting the application. Consequently, the tribunal admitted the application, initiated the corporate insolvency resolution process, declared a moratorium, and appointed an interim resolution professional (IRP).Conclusion:The tribunal concluded that the corporate debtor defaulted on the debt claimed by the operational creditor. The application was admitted, and the corporate insolvency resolution process was ordered to commence. A moratorium was declared, prohibiting suits, asset transfers, and recovery actions against the corporate debtor. The IRP was directed to take charge immediately and comply with relevant sections of the I&B Code, 2016. The tribunal also directed the operational creditor and the registry to communicate the order to the IRP and the corporate debtor.