Petition admitted for Corporate Insolvency Resolution Process due to unpaid Operational Debt

The Tribunal admitted the petition on 28.05.2020, finding it complete for the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for unpaid Operational Debt. The Tribunal appointed an Interim Resolution Professional (IRP) and declared a moratorium, prohibiting legal actions against the Debtor's assets until the completion of the CIRP. The IRP was instructed to comply with relevant provisions of the Insolvency and Bankruptcy Code.

---

---

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Existence of Debt and Default
3. Pre-existing Dispute
4. Limitation Period
5. Appointment of Interim Resolution Professional (IRP)
6. Declaration of Moratorium

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiation of CIRP against the Corporate Debtor, Honest Derivatives Private Limited, for the unpaid Operational Debt due.

2. Existence of Debt and Default:
The Petitioner, Solartex India Private Limited, claimed that the Corporate Debtor owed INR 21,57,700.38 along with interest at the rate of 30% p.a. from the due date of each invoice till the date of actual payment. The debt arose from a purchase order for 500MT of Indonesian Coal, which was supplied but not paid for by the Corporate Debtor. The date of default was determined as 10.11.2016.

3. Pre-existing Dispute:
The Corporate Debtor argued that there was a pre-existing dispute, citing a reply notice denying the debt and claiming losses of INR 4,44,17,608.00. However, the Tribunal found that the disputes raised were spurious, hypothetical, and illusory, as they were related to an associate concern of the Operational Creditor, not the Operational Creditor itself. The Tribunal noted that the Corporate Debtor's suits were filed after the receipt of the Demand Notice, thus not qualifying as pre-existing disputes.

4. Limitation Period:
The Tribunal confirmed that the application was filed within the limitation period. The date of default was 10.11.2016, and the petition was filed on 30.07.2018, which is within the three-year limitation period.

5. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Shri Kailash T. Shah as the Interim Resolution Professional (IRP) with instructions to file a declaration disclosure statement within two days and make a public announcement of the moratorium. The IRP was directed to follow the provisions of Sections 13 and 14 of the IBC and perform duties as per Sections 15, 17, 18, 19, 20, and 21 of the Code.

6. Declaration of Moratorium:
The Tribunal declared a moratorium prohibiting:
- The institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Actions to foreclose, recover, or enforce any security interest created by the Corporate Debtor.
- Recovery of property by an owner or lessor where such property is occupied by the Corporate Debtor.
The moratorium will remain effective until the completion of the CIRP.

Order:
The Tribunal admitted the petition on 28.05.2020, finding the petition complete for the initiation of CIRP against the Corporate Debtor. The Tribunal directed the IRP to proceed as per the IBC provisions and maintain the moratorium. An authenticated copy of the order was to be communicated to the Operational Creditor, Corporate Debtor, IRP, and the Registrar of Companies.

---