Tribunal Orders Corporate Insolvency Resolution Process Initiation

The tribunal allowed the petition and ordered the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Mr. Kotoju Vasudeva Rao was appointed as the Interim Resolution Professional (IRP), a moratorium was declared, and a public announcement of CIRP initiation was directed. The petitioner was ordered to deposit Rs. 1,00,000/- with the IRP for initial CIRP expenses. The conditions for triggering CIRP were met as the debt was due and payable, with no pre-existing disputes substantiated by the Corporate Debtor, leading to the tribunal's decision.

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Issues Involved:
1. Whether the documentary evidence furnished with the application shows that the debt is due and payable and has not yet been paid.
2. Whether there is the existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of demand notice of the unpaid operational debt in relation to such dispute.

Issue-wise Detailed Analysis:

1. Whether the documentary evidence furnished with the application shows that the debt is due and payable and has not yet been paid:

The Operational Creditor, formerly known as Green Ark Enersol Pvt. Ltd, supplied 16,130 AMR modems along with antenna and communication cables to the Corporate Debtor. The Corporate Debtor acknowledged the receipt of these modems and confirmed that 5,000 had been installed and integrated with TANGEDCO systems. Despite this, the Corporate Debtor failed to clear the dues as per the purchase order dated 03.11.2015. The Operational Creditor sent a demand notice dated 30.11.2020, but received no reply or payment from the Corporate Debtor. The tribunal noted that there was no dispute raised regarding the existence of the debt and that part payments had been made by the Corporate Debtor towards the claimed amount. The tribunal concluded that the documentary evidence clearly showed that the debt was due and payable, but had not been paid.

2. Whether there is the existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of demand notice of the unpaid operational debt in relation to such dispute:

The Corporate Debtor argued that no agreement existed with the Operational Creditor and questioned the latter's locus standi, suggesting that the Operational Creditor did not substantiate its claim of being formerly known as Green Ark. The Corporate Debtor also claimed that Green Ark had only supplied 16,140 modems against an order of 20,000 and completed the installation of only 2,945 modems. Due to delays, TANGEDCO halted payments to the Corporate Debtor. Despite the shortfall, the Corporate Debtor paid Rs. 2,50,52,800/- out of Rs. 6,26,32,001/- and an additional Rs. 22,85,641/- for the installation of 2,945 modems. The Corporate Debtor contended that Green Ark defaulted on its obligations under the purchase order and that mutual understanding was reached that TANGEDCO would make the remaining payment upon completion of the work. The Corporate Debtor also highlighted serious disputes regarding the quality of work done under the purchase order. However, the tribunal found that no disputes were raised before the receipt of the demand notice and no records were provided to show any pre-existing disputes.

Conclusion:

The tribunal relied on the Supreme Court rulings in M/s Innoventive Industries Vs. ICICI Bank and Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited to determine the conditions under which an operational creditor can trigger the Corporate Insolvency Resolution Process (CIRP). The tribunal found that the conditions for triggering CIRP were met, as the debt was due and payable, and no pre-existing disputes were substantiated by the Corporate Debtor. Therefore, the petition was allowed, and the tribunal ordered the initiation of CIRP against the Corporate Debtor.

Orders:

1. The tribunal appointed Mr. Kotoju Vasudeva Rao as the Interim Resolution Professional (IRP).
2. A moratorium was declared prohibiting the institution or continuation of suits or proceedings against the Corporate Debtor.
3. The tribunal directed the public announcement of the initiation of CIRP and ordered the petitioner to deposit Rs. 1,00,000/- with the IRP for initial CIRP expenses.
4. The tribunal directed the Registry to send a copy of the order to the Registrar of Companies, Hyderabad, and to furnish a free copy to the parties involved.

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