Tribunal Admits Application Under Insolvency Code, Declares Moratorium

The Tribunal admitted the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, declared a moratorium, and appointed an Interim Resolution Professional to initiate the Corporate Insolvency Resolution Process. The Tribunal found the disputes raised by the Corporate Debtor regarding the quality of goods supplied to be unsubstantiated, leading to the conclusion that the Operational Creditor had complied with the necessary provisions for initiating insolvency proceedings.

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Issues Involved:
1. Application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Outstanding debt and demand notice.
3. Dispute over the quality of goods supplied.
4. Alleged pre-existing disputes.
5. Compliance with Section 9(5) of the IBC, 2016.
6. Appointment of Interim Resolution Professional (IRP).

Issue-wise Detailed Analysis:

1. Application under Section 9 of the Insolvency & Bankruptcy Code, 2016:
The application was filed by the Operational Creditor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for an outstanding amount of Rs. 7,06,839/-.

2. Outstanding debt and demand notice:
The Operational Creditor, engaged in the business of dealing in grains and poultry feed ingredients, claimed that despite the issuance of a demand notice, the Corporate Debtor failed to pay the outstanding amount. The debt was acknowledged by the Corporate Debtor through a balance confirmation statement.

3. Dispute over the quality of goods supplied:
The Corporate Debtor contended that the goods supplied were often rotten and unusable, affecting their business. They claimed the goods were supplied randomly by different entities controlled by the Rungta family, causing difficulty in assessing the quality and quantity of goods received.

4. Alleged pre-existing disputes:
The Corporate Debtor argued that there were pre-existing disputes regarding the quality of goods, supported by emails and a test report. However, the Tribunal found these disputes to be hypothetical and not bona fide, as the emails did not specify the invoices in question, and the test report was unrelated to the disputed invoices.

5. Compliance with Section 9(5) of the IBC, 2016:
The Tribunal examined whether the application met the requirements of Section 9(5) of the IBC, 2016. It was found that the application was complete, the demand notice was received, and there were no disciplinary proceedings against the proposed Resolution Professional. The Tribunal concluded that the Operational Creditor complied with the necessary provisions, and the dispute raised by the Corporate Debtor was not genuine.

6. Appointment of Interim Resolution Professional (IRP):
Since the name of the IRP was not proposed by the Operational Creditor, the Tribunal appointed Shri Sanjeev Jhunjhunwala as the Interim Resolution Professional. The IRP was directed to convene a Committee of Creditors and submit a resolution plan within 105 days.

Conclusion:
The Tribunal admitted the application under Section 9 of the IBC, 2016, declared a moratorium, and directed the IRP to carry out the necessary steps for the CIRP. The order emphasized that the disputes raised by the Corporate Debtor were not bona fide and lacked merit, leading to the initiation of the insolvency resolution process.

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