Tribunal Admits Insolvency Application, Initiates Corporate Resolution Process

The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, finding that the Operational Creditor had proven the debt and default by the Corporate Debtor. Despite the Corporate Debtor's disputes regarding the quality of work and alleged deficiencies, the Tribunal noted the lack of appearance by the Corporate Debtor at hearings and the non-notarized reply. Consequently, the Tribunal declared a moratorium, initiated the Corporate Insolvency Resolution Process, appointed an Interim Resolution Professional, and directed the Operational Creditor to deposit a sum in the ESCROW Account for further proceedings.

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Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor based on outstanding dues.

Analysis:
1. The Applicant filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor due to non-payment of &8377; 9,86,634 for works carried out as per a work order. The Applicant alleged that despite raising running account bills, the Corporate Debtor only paid a partial amount, leaving a substantial outstanding sum.

2. The Corporate Debtor, in response, raised disputes regarding the quality of work performed by the Operational Creditor, alleging delays and deficiencies. The Corporate Debtor claimed that additional costs were incurred due to the Operational Creditor's alleged failure to complete the work satisfactorily, leading to the engagement of another contractor to finish the pending work.

3. The Tribunal noted that the Corporate Debtor did not appear for hearings and that the reply filed by the Corporate Debtor was not notarized. Despite the Corporate Debtor's contentions about inadequate manpower deployment, the bills were acknowledged, and payments were made post the alleged deficiency in work.

4. The Tribunal observed that the Operational Creditor persistently demanded payment, and the Corporate Debtor did not raise objections or disputes earlier. The Corporate Debtor's belated dispute about manpower deployment was deemed untenable as payments were made post the alleged deficiency.

5. The Tribunal found that the Operational Creditor had proven the debt and default by the Corporate Debtor. The Corporate Debtor failed to respond to the Demand Notice and did not dispute the claim before the Tribunal. Hence, the Tribunal admitted the application and declared a moratorium, initiating the Corporate Insolvency Resolution Process.

6. The Tribunal appointed an Interim Resolution Professional, declared a moratorium on certain actions against the Corporate Debtor, and directed the Operational Creditor to deposit a sum in the ESCROW Account. The Interim Resolution Professional was tasked with convening a Committee of Creditors and identifying a Resolution Applicant within a specified timeframe.

7. The Tribunal directed the Registry to communicate the order to all relevant parties and scheduled a follow-up date for filing a progress report. Certified copies of the order were to be issued upon compliance with formalities by concerned parties.

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