Tribunal admits petition for Corporate Insolvency Resolution Process under Insolvency and Bankruptcy Code

The Tribunal admitted the petition for the initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code. It found that the Operational Creditor had proven the existence of debt and default by the Corporate Debtor, dismissing the disputed debit/credit notes as unsupported by valid evidence. A moratorium was declared under Section 14 of the Code, and an Interim Resolution Professional (IRP) was appointed to oversee the CIRP process.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Existence of debt and default by the Corporate Debtor.
3. Dispute regarding debit/credit notes and their validity.
4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code.
5. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The petition was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP against the Corporate Debtor. The application was supported by invoices, goods receipts, and a ledger account showing the outstanding debt.

2. Existence of debt and default by the Corporate Debtor:
The Operational Creditor claimed an outstanding debt of Rs. 85,53,570 as on 10-02-2017. The Corporate Debtor issued cheques which were dishonored, leading to a complaint under Section 138 of the Negotiable Instruments Act. The Corporate Debtor acknowledged the debt in their ledger account but disputed certain debit/credit notes.

3. Dispute regarding debit/credit notes and their validity:
The Corporate Debtor claimed that there were mutually agreed debit/credit notes reducing the outstanding amount. However, the Operational Creditor denied the validity of these notes, alleging that the signatures were forged. A forensic report supported the Operational Creditor's claim, and the Tribunal noted that the Corporate Debtor failed to produce original debit notes, indicating possible manipulation.

4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code:
The Tribunal observed that the Corporate Debtor failed to raise a dispute within ten days of receiving the demand notice, as required under Section 8(2)(a) of the Code. The Tribunal also noted that the Operational Creditor complied with the provisions of Section 9(3)(b) and (c) of the Code by filing a supplementary affidavit with the bank's statement.

5. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium:
The Tribunal admitted the petition and declared a moratorium under Section 14 of the Code, prohibiting certain actions against the Corporate Debtor. Mr. Pramod Kumar Sharma was appointed as the Interim Resolution Professional (IRP) to carry out the CIRP.

Conclusion:
The Tribunal found that the Operational Creditor had established the existence of debt and default by the Corporate Debtor. The alleged dispute raised by the Corporate Debtor was deemed a "patently feeble legal argument" unsupported by valid evidence. Consequently, the petition was admitted, and a moratorium was declared, with the appointment of an IRP to initiate the CIRP process.

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