2018 (5) TMI 642 - Tri - Insolvency and Bankruptcy

Corporate Debtor's Dispute Rejected, CIRP Initiated; IRP Appointed; Moratorium Declared

Greenply Industries Limited Versus Southern Cooling Tower Private Limited

Greenply Industries Limited Versus Southern Cooling Tower Private Limited - TMI Issues Involved:1. Existence of a genuine dispute between the operational creditor and the corporate debtor.2. Validity of the operational creditor's claim under Section 9 of the Insolvency and Bankruptcy Code, 2016.3. Appointment of an Interim Resolution Professional (IRP) and initiation of the Corporate Insolvency Resolution Process (CIRP).Issue-wise Detailed Analysis:1. Existence of a Genuine Dispute:The primary issue was whether the corporate debtor succeeded in proving the existence of a genuine dispute as alleged in the reply. The operational creditor filed the petition under Sec. 9 of the Insolvency & Bankruptcy Code, 2016, claiming that the corporate debtor defaulted on payment of Rs. 62,12,142/-. The corporate debtor argued that there was a dispute regarding the quality of the goods supplied, asserting that the 9mm plywood was defective and not in conformity with the required standards. They provided test results (Annexure-B) and an email (Annexure-C) to substantiate their claims. However, the tribunal found that the corporate debtor did not provide sufficient evidence to prove that the goods were returned or that there was a pre-existing dispute. The tribunal cited the Supreme Court's decision in Kirusa Software Pvt. Ltd. vs. Mobilox Innovations Pvt. Ltd., which held that feeble or frivolous disputes cannot be considered genuine disputes under the Insolvency and Bankruptcy Code, 2016. The tribunal concluded that the corporate debtor's objections were not sustainable and were merely raised to evade liability.2. Validity of the Operational Creditor's Claim:The operational creditor claimed that the corporate debtor made part payments, acknowledging the debt. They provided invoices, delivery challans, and other documents to support their claim. The tribunal noted that the corporate debtor did not produce any supporting documents to prove that the purchase order (Annexure-A) was served upon the applicant or that the goods were returned due to inferior quality. The tribunal found that the goods were received and accepted by the corporate debtor without raising any objections. The tribunal also noted that the corporate debtor's objections were raised only in the reply notice and not before the receipt of the demand notice. Therefore, the tribunal found that the operational creditor's claim was valid and that the corporate debtor's objections were not genuine.3. Appointment of an Interim Resolution Professional (IRP) and Initiation of CIRP:The operational creditor proposed Shri Prabhjit Singh Soni as the IRP. The tribunal found that there were no disciplinary proceedings pending against the proposed IRP and that he was fully qualified to act as an Insolvency Resolution Professional. The tribunal admitted the petition for initiating the Corporate Insolvency Resolution Process (CIRP) and declared a moratorium as stated in Sec. 13 of the Insolvency and Bankruptcy Code, 2016. The tribunal directed the IRP to cause a public announcement of the initiation of CIRP and call for the submission of claims under Sec. 15. The tribunal also outlined the prohibitions during the moratorium period under Sec. 14 of the Insolvency and Bankruptcy Code, 2016, including the institution of suits or continuation of pending suits, transferring or disposing of assets, and recovery of property by an owner or lessor.Conclusion:The tribunal concluded that the corporate debtor failed to prove the existence of a genuine dispute and that the operational creditor's claim was valid. The petition for initiating the Corporate Insolvency Resolution Process (CIRP) was admitted, and Shri Prabhjit Singh Soni was appointed as the Interim Resolution Professional (IRP). The tribunal declared a moratorium and directed the IRP to make a public announcement and call for the submission of claims. The matter was listed for filing of the progress report on 01.03.2018.