Authority admits Section 9 petition for non-payment of operational debt, initiates insolvency resolution

The Adjudicating Authority admitted the petition under Section 9 of The Insolvency and Bankruptcy Code, 2016, filed by the Operational Creditor against the Corporate Debtor for non-payment of an outstanding amount related to road construction work, constituting an operational debt. The Authority found evidence of default by the Corporate Debtor, proper service of the Demand Notice, and compliance with all statutory requirements by the Operational Creditor. Consequently, the Authority initiated the corporate insolvency resolution process, directing a reference to the Insolvency and Bankruptcy Board of India for appointment of an Insolvency Professional and imposing a moratorium on certain actions against the Corporate Debtor.

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Issues:
1. Whether the claim is an operational debt or not.
2. Whether there is an occurrence of default.
3. Whether notice as required by sub-section (2) of Section 8 was served on the Corporate Debtor.
4. Whether Corporate Debtor brought to the notice of Operational Creditor any dispute within 10 days of receiving the Demand Notice.
5. Whether the Operational Creditor followed the requirements of Section 9 of the Code read with Rules 5 and 6.

Analysis:
1. The Operational Creditor filed a petition under Section 9 of The Insolvency and Bankruptcy Code, 2016, claiming an outstanding amount for road construction work done for the Corporate Debtor. The total due amount was specified in the Work Agreement, making it an operational debt as defined in the Code.

2. The Operational Creditor provided evidence of completion of work and non-payment by the Corporate Debtor, establishing a default in making payment of the operational debt.

3. The Operational Creditor served a Demand Notice as required by the Code, and the Track Report confirmed the service on the Corporate Debtor, with no response received, fulfilling the notice requirement.

4. The Corporate Debtor did not bring any dispute to the notice of the Operational Creditor within the stipulated period, further supporting the claim for initiation of insolvency proceedings.

5. The Operational Creditor complied with all necessary provisions of the Code and Rules, including issuing notices and providing required documents. The petition was found to be complete, justifying the initiation of the corporate insolvency resolution process.

Conclusion:
The Adjudicating Authority admitted the petition, emphasizing the entitlement of the Operational Creditor to file for insolvency. The Authority directed a reference to the Insolvency and Bankruptcy Board of India for recommending an Insolvency Professional. A moratorium was declared, prohibiting certain actions against the Corporate Debtor, with exceptions for essential services. The moratorium order was to be in force until the completion of the Corporate Insolvency Resolution Process, subject to legal provisions.

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