Court allows Corporate Insolvency Resolution Process against defaulting Corporate Debtor

The court ruled in favor of the petitioner, allowing the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on payments. The court rejected the Corporate Debtor's claims of making payments to petitioner's employees, emphasizing the dishonored cheques and lack of genuine disputes. An Interim Resolution Professional was appointed, and a Moratorium was declared to facilitate the CIRP process, ensuring protection for both parties involved.

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Issues involved:
Petition seeking Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor for default in payment. Dispute over outstanding dues, dishonored cheques, suspension of services, and authenticity of payments made. Verification of debt and default, rejection of spurious disputes, appointment of Interim Resolution Professional, and declaration of Moratorium.

Analysis:
The petitioner filed a company petition seeking to initiate the CIRP against the Corporate Debtor for defaulting on payment, invoking Sections 8 and 9 of the Insolvency & Bankruptcy Code. The petitioner provided customs clearing services to the Corporate Debtor from 2015-2019 and issued invoices for the services rendered. The total due amount, including interest, was claimed to be Rs. 18,09,542. The Corporate Debtor disputed the liability, claiming payments made to key employees of the petitioner, which the petitioner refuted, stating the payments were for out-of-pocket expenses during customs clearing. The Corporate Debtor issued several cheques to the petitioner, all of which were dishonored due to insufficient funds.

The Corporate Debtor contended that payments were made to the petitioner's employees, reducing the outstanding balance significantly. However, the petitioner argued that after adjustments, only a nominal amount was due, contradicting the issuance of the dishonored cheques totaling Rs. 4,01,049. The Corporate Debtor's claim of non-receipt of ledger and bank statements from the petitioner was refuted, as the petitioner had issued a notice under Section 138 of the Negotiable Instrument Act. The suspension of services by the Corporate Debtor after the dishonor of cheques was deemed insufficient to constitute a genuine dispute under Section 5(6) of the Code.

The Corporate Debtor raised disputes regarding specific invoices after a significant time lapse, which the petitioner countered by providing evidence of transactions executed as per the Corporate Debtor's instructions. The judgment highlighted the need to differentiate genuine disputes from spurious ones, citing a Supreme Court case for guidance. An Interim Resolution Professional was appointed, and a Moratorium was declared, prohibiting legal actions against the Corporate Debtor and appointing measures for the CIRP process. The order was communicated to both parties and the appointed professional promptly.

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