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of <h1>Tribunal Recognizes Operational Debt, Initiates Corporate Insolvency Resolution Process</h1> <h3>R.L. Steel & Energy Ltd. Versus Shyam Industries Ltd.</h3> The Tribunal concluded that the Petitioner's claim was an 'operational debt' as evidenced by goods supplied to the Corporate Debtor. The Petitioner was ... Insolvency and Bankruptcy proceedings - appointment of an Interim Resolution Professional - Held that:- On the ground that Operational Creditor did not comply with sub-section (4) of Section 9 of the Code, the Petition cannot be rejected. This Adjudicating Authority shall follow the procedure laid down under sub-section (3) of Section 16 of the Code, and the Insolvency and Bankruptcy Board of India shall follow sub-section (4) of Section 16 of the Code. Therefore, this Adjudicating Authority, by this order passed under sub-section (5) of Section 9 of the Code, is admitting this Petition. This Adjudicating Authority is also of the view that it is necessary to make a Reference to the Insolvency and Bankruptcy Board of India established under the Code to recommend the name of an Insolvency Professional, against whom no disciplinary proceedings are pending, to this Adjudicating Authority, within ten (10) days from the date of receipt of the Reference. In the case on hand, simultaneous with the admission order, this Adjudicating Authority is not going to appoint Interim Resolution Professional because the Applicant did not propose the name of Interim Resolution Professional. But, this Adjudicating Authority is going to appoint Interim Resolution Professional after the same is recommended by the Insolvency and Bankruptcy Board of India under Section 16(4) of the Code. This order of moratorium shall be in force from the date of order till the completion of Corporate Insolvency Resolution Process subject to the Proviso under sub-section (4) of Section 14. Issues Involved:1. Whether the claim of the Petitioner is an 'operational debt'.2. Whether the Petitioner is an 'Operational Creditor'.3. Whether there is an occurrence of default.4. Whether the Operational Creditor delivered the Demand Notice on the Corporate Debtor.5. Whether there is the existence of a dispute and record of pendency of suit or arbitration proceedings.6. Whether there is compliance with sub-sections (1) to (4) of Section 9 of the Code.Issue-wise Detailed Analysis:1. Whether the claim of the Petitioner is an 'operational debt':The Tribunal concluded that the Petitioner supplied goods to the Corporate Debtor, establishing that the claim is an operational debt. The invoices and transactions provided by the Petitioner confirmed this.2. Whether the Petitioner is an 'Operational Creditor':The Petitioner is identified as an 'Operational Creditor' since the operational debt is due from the Corporate Debtor. The evidence, including invoices, transaction details, and a certificate issued by Punjab National Bank, substantiated this claim.3. Whether there is an occurrence of default:The Tribunal found that there was a clear occurrence of default. The Corporate Debtor admitted the liability in a letter dated 19th January 2017, acknowledging an outstanding amount and making partial payments. The Petitioner denied any settlement agreement and continued to demand the outstanding amount plus interest.4. Whether the Operational Creditor delivered the Demand Notice on the Corporate Debtor:The Petitioner issued the first Demand Notice on 15th January 2017, and subsequent notices were also delivered. The Corporate Debtor replied to these notices, but not within the stipulated 10 days as required by Section 8(2) of the Insolvency Code, failing to mention any pending suits or arbitration proceedings.5. Whether there is the existence of a dispute and record of pendency of suit or arbitration proceedings:The Corporate Debtor raised a dispute regarding the claimed amount based on an alleged Settlement Agreement dated 17th January 2017. However, this agreement was not signed by the Petitioner and was denied by them. The Tribunal noted that any dispute should have been raised in a suit or arbitration proceeding before the receipt of the Demand Notice.6. Whether there is compliance with sub-sections (1) to (4) of Section 9 of the Code:The Tribunal confirmed compliance with Sections 19(1) to (3) (a) (b) of the Code. The Petitioner did not propose a Resolution Professional, so the Tribunal will refer to the Insolvency and Bankruptcy Board of India to recommend one.Conclusion:The Tribunal admitted the Petition and declared a moratorium under Section 13(1)(a) prohibiting certain actions against the corporate debtor as laid down in Section 14 of the Code. The Tribunal will appoint an Interim Resolution Professional after receiving a proposal from the Insolvency and Bankruptcy Board of India. The order of moratorium will be in force until the completion of the Corporate Insolvency Resolution Process. The Tribunal ordered communication of this decision to both the Operational Creditor and the Corporate Debtor and scheduled the matter for further proceedings upon receipt of the proposal from the Insolvency and Bankruptcy Board of India.
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