2021 (10) TMI 1326 - Tri - Insolvency and Bankruptcy

Tribunal initiates insolvency process against Corporate Debtor for default

The Tribunal admitted the Operational Creditor's application under Section 9(5) of the IBC, initiating Corporate Insolvency Resolution Process against the ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- This Bench observes that although, the Corporate Debtor has disputed its liability, however, there is nothing annexed with the Notice of Dispute dated 15.01.2020, which could suggest that there was a dispute existing, prior to the issuance of the Demand Notice. Further, there are no explanation given by the Corporate Debtor in its Notice of Dispute as to how the debt claimed by the Operational Creditor is not an Operational Debt. The Operational Creditor has succeeded in establishing the default on the part of Corporate Debtor in making payment of the operational debt. The Application filed under Section 9 fulfills all the requirements of the law - Application admitted - moratorium declared. Issues Involved:Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on default in payment by the Corporate Debtor.Detailed Analysis:Issue 1: Initiation of CIRP under Section 9 of IBCThe Operational Creditor filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor. The Operational Creditor had entered into an agreement with the Corporate Debtor for providing services, but the Corporate Debtor failed to make payments against the raised Purchase Order. The total debt claimed amounted to Rs. 3,54,54,483.49, with a default date of 10.08.2018.Issue 2: Dispute raised by the Corporate DebtorThe Corporate Debtor, in response to the Demand Notice under Section 8 of IBC, 2016, raised a dispute denying the claim of the Operational Creditor. The Corporate Debtor alleged that the invoices were forged and fabricated, and there were pre-existing disputes regarding the performance under the agreement. However, the Corporate Debtor failed to provide any evidence or explanation in the Notice of Dispute to support its claims.Issue 3: Adjudication and DecisionAfter an ex-parte order due to the Corporate Debtor's failure to respond, the Tribunal examined the submissions and documents. The Tribunal noted that the Corporate Debtor disputed its liability but failed to provide any evidence of a pre-existing dispute or explain why the debt was not operational. Consequently, the Tribunal found the Operational Creditor had established the default by the Corporate Debtor in making payments. The Tribunal admitted the application under Section 9(5) of the IBC, initiating CIRP and declaring a moratorium.Issue 4: Appointment of Interim Resolution Professional (IRP)The Tribunal appointed Mr. Navjit Singh as the IRP, subject to certain conditions, and directed the Operational Creditor to deposit Rs. 2,00,000 with the IRP for immediate expenses. The IRP was instructed to take necessary steps under various sections of the IBC, 2016.Issue 5: Prohibitions and Communication of OrderThe Tribunal imposed prohibitions on the Corporate Debtor, including the institution of suits, transferring assets, and recovery actions. The Court Officer/Registry was tasked with communicating the order to the relevant parties and authorities, including the Operational Creditor, Corporate Debtor, IRP, ROC, and IBBI.This detailed analysis covers the key aspects of the judgment involving the initiation of CIRP under Section 9 of the IBC, the dispute raised by the Corporate Debtor, the Tribunal's decision, the appointment of the IRP, and the communicated prohibitions and orders.