Tribunal Admits CIRP Application, Appoints IRP, Declares Moratorium

The Tribunal admitted the application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, appointed an Interim Resolution Professional (IRP), and declared a moratorium. The Tribunal found the existence of operational debt proven, while the alleged dispute regarding the quality of goods supplied was not substantiated to its satisfaction.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP).
2. Existence of operational debt and default.
3. Alleged pre-existing dispute regarding the quality of goods supplied.
4. Appointment of Interim Resolution Professional (IRP).
5. Declaration of moratorium.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code 2016") by the Operational Creditor against the Corporate Debtor, seeking to initiate CIRP, declare moratorium, and appoint an Interim Resolution Professional (IRP).

2. Existence of Operational Debt and Default:
The Operational Creditor sold and delivered wheat worth Rs. 4,24,20,000 to the Corporate Debtor under a sales contract dated 10-8-2016. The Corporate Debtor made partial payments amounting to Rs. 1,96,48,779, leaving an outstanding balance of Rs. 2,27,71,221. Despite several discussions and negotiations, the outstanding debt remained unpaid, leading to the issuance of a demand notice on 16-8-2017, which was not responded to by the Corporate Debtor.

3. Alleged Pre-existing Dispute Regarding the Quality of Goods Supplied:
The Corporate Debtor claimed that the wheat supplied was of inferior quality and raised a dispute through letters dated 18-8-2016 and 21-9-2016, demanding compensation of Rs. 63,00,000 for the alleged quality issues. However, the Operational Creditor denied receiving these letters and alleged that they were fabricated to avoid liability. The Tribunal observed that these letters were produced only at an advanced stage of the hearing and found no joint inspection or acknowledgment by the Operational Creditor regarding the quality issue. Thus, the Tribunal concluded that the dispute was not substantiated to its satisfaction.

4. Appointment of Interim Resolution Professional (IRP):
Since the Operational Creditor did not propose an IRP, the Tribunal appointed Ms. Santhanam Rajashree as the IRP based on the list furnished by the Insolvency and Bankruptcy Board of India (IBBI), subject to no pending disciplinary proceedings and required disclosures.

5. Declaration of Moratorium:
Upon admitting the application, the Tribunal declared a moratorium as per Section 14(1) of the I&B Code, which includes:
- The institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Any action to foreclose, recover, or enforce any security interest.
- Recovery of any property by an owner or lessor.

The moratorium will remain effective until the completion of the CIRP or until an order for liquidation or approval of a resolution plan is passed.

Conclusion:
The Tribunal admitted the application for initiating CIRP against the Corporate Debtor, appointed an IRP, and declared a moratorium. The Tribunal found that the existence of operational debt was proved, and the alleged dispute regarding the quality of goods was not substantiated to its satisfaction.

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