Tribunal Admits Insolvency Application, Imposes Moratorium

The Tribunal admitted the application under sub-section (5) of Section 9 of the IB Code, appointing an Interim Insolvency Resolution Professional and imposing a moratorium under Section 13(1)(a) of the IB Code. The disputes raised by the Respondent were deemed to pertain to the cheque signatory's authority rather than the debt's existence, with reconciliation offers indicating no substantial dispute. Compliance with Section 9(c) was found adequate, leading to the conclusion that the application was complete. The moratorium included prohibitions on legal actions against the corporate debtor and asset transactions until the completion of the Corporate Insolvency Resolution Process.

---

---

Issues Involved:
1. Whether any dispute has been raised by the Respondent/Corporate Debtor within the meaning of sub-section (6) of Section 5 or sub-section (2) of Section 8 of the IB Code, and if so, whether it is a bona fide dispute on substantial grounds.
2. Whether there is sufficient compliance of Section 9(c) of the IB Code.

Issue-wise Detailed Analysis:

Issue 1: Dispute Raised by the Respondent/Corporate Debtor

The Applicant, Bhagwati Corporation, issued several notices to the Respondent, Shrinidhi Laminates Limited, regarding dishonoured cheques and outstanding debts. The Respondent raised disputes in reply notices. The primary contention was that the cheques were issued by Rajkumar Agrawal, who was no longer a director from 1st May 2016, and thus not an authorised signatory. The Respondent also alleged collusion between the Applicant and Rajkumar Agrawal to create false documents, citing offences under Sections 406, 420, 465, 467, and 471 IPC.

The National Company Law Appellate Tribunal's precedent in Kirusa Software (P.) Ltd. v. Mobilox Innovations Private Ltd. was referenced, which states that disputes under the IB Code must relate to the existence of debt, quality of goods or services, or breach of representation or warranty. The Tribunal found that the disputes raised by the Respondent pertained to the authority of the cheque signatory rather than the existence of the debt itself. The Respondent's suggestion for reconciliation and partial payments further confirmed the existence of the debt, indicating no substantial dispute regarding the debt's existence.

Issue 2: Compliance with Section 9(c) of the IB Code

The Tribunal directed the Applicant to comply with Section 9(c) by providing a certificate from the financial institution maintaining the account of the Operational Creditor. The Applicant filed an additional affidavit and the required certificate, confirming no payment of the unpaid operational debt by the Corporate Debtor. The certificate detailed the cheques received from Durolam Limited for clearing, and the Applicant also submitted a statement of account from the bank. The Tribunal found that there was sufficient compliance with Section 9(c).

Conclusion:

The Tribunal concluded that the application was complete in all respects, with no substantial dispute regarding the existence of the debt or the quality of goods supplied. The application was admitted under sub-section (5) of Section 9 of the IB Code. Shri Nimai Shah was appointed as the Interim Insolvency Resolution Professional, and a moratorium was ordered under Section 13(1)(a) of the IB Code, prohibiting various actions against the corporate debtor.

Moratorium Details:
- Prohibition of institution or continuation of suits or proceedings against the corporate debtor.
- Prohibition of transferring, encumbering, alienating, or disposing of the corporate debtor's assets.
- Prohibition of actions to foreclose, recover, or enforce any security interest.
- Prohibition of recovery of property by an owner or lessor.

The moratorium came into force from the date of the order until the completion of the Corporate Insolvency Resolution Process, subject to certain conditions. The application was disposed of with no order as to costs.

---