Tribunal admits petition for Corporate Insolvency Resolution Process

The tribunal admitted the petition for the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, as the operational debt of over INR 1 lakh was found to be due and defaulted. The tribunal dismissed objections regarding the demand notice and board resolution, rejecting the Corporate Debtor's claim of a pre-existing dispute. A moratorium was declared, an Interim Resolution Professional appointed, and parties were instructed to cooperate with the IRP. The petition was admitted on 05.06.2020, with directions for communication of the order to relevant parties.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Existence and amount of operational debt
3. Validity of the demand notice and board resolution
4. Alleged pre-existing dispute
5. Limitation period for filing the petition

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of CIRP against the Corporate Debtor. The tribunal observed that the petition was filed within the limitation period, as the date of default was 19.04.2018, and the petition was filed on 05.07.2018.

2. Existence and Amount of Operational Debt:
The Operational Creditor claimed an amount of INR 90,81,732.60, comprising a principal amount of INR 87,25,079.00 and interest of INR 3,56,662.72. The invoices and delivery challans submitted by the Operational Creditor substantiated the supply of goods to the Corporate Debtor. The tribunal found that the existence of operational debt above INR 1 lakh was established, and the debt was due and defaulted on 19.04.2018.

3. Validity of the Demand Notice and Board Resolution:
The Corporate Debtor contested the validity of the demand notice and the board resolution authorizing the filing of the petition, alleging that the board meeting was not properly convened. The tribunal examined the affidavits and rebuttal documents provided by the Operational Creditor, which confirmed that the board meeting was duly held, and the resolution was valid. The tribunal dismissed the Corporate Debtor's objections regarding the defective letter of authority and the board resolution.

4. Alleged Pre-existing Dispute:
The Corporate Debtor argued that there was a pre-existing dispute regarding the supply of defective goods, supported by a confirmation letter dated 01.01.2016. The Operational Creditor refuted this claim, providing evidence that the signatures on the alleged letter did not match those of their representatives. The tribunal concluded that the Corporate Debtor's defense of a pre-existing dispute was not credible and was an attempt to avoid payment.

5. Limitation Period for Filing the Petition:
The tribunal confirmed that the petition was filed within the limitation period. The date of default was 19.04.2018, and the petition was filed on 05.07.2018, well within the prescribed time frame.

Order:
The tribunal admitted the petition, finding that the operational debt was above INR 1 lakh, the debt was due, and the default had occurred on 19.04.2018. There was no existence of a dispute prior to the notice issued by the Operational Creditor. Consequently, the tribunal declared a moratorium as per Sections 13 and 14 of the Insolvency and Bankruptcy Code and appointed Mr. Rajeev Saxena as the Interim Resolution Professional (IRP). The IRP was directed to make a public announcement of the moratorium and perform his duties as per the provisions of the Code. The tribunal also instructed all personnel connected with the Corporate Debtor to cooperate with the IRP.

The petition CP (IB) No. 357/9/NCLT/AHM/2018 was admitted on 05.06.2020, and the tribunal issued directions for the communication of the order to relevant parties.

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