2019 (3) TMI 980 - Tri - Insolvency and Bankruptcy

Tribunal admits CIRP application, declares moratorium, appoints IRP, and rules in favor of Operational Creditor

The tribunal admitted the application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declared a moratorium, ... Corporate Insolvency Resolution Process - Corporate Debtor failure in payment of principal amount and interest thereon @ 24% in respect of goods supplied and delivered to the Corporate Debtor despite repeated demands - delay in completing the resolution process by the IRP - proof of any pre-exiting dispute - HELD THAT:- An overall screening of the documents produced on the side of the Corporate Debtor as well as on the side of the applicant, it appears to me that the case trying to set up on the side of Operational Creditor is more believable and more credit worthy than that of the case attempted to be established on the side of the corporate debtor. In view of the above said discussion, no hesitation in holding that the invoices referred to in the Application and challans referred to in the Rejoinder were delivered to the Corporate debtor and thereby the amount in demand is found due and payable by the corporate Debtor. The amount found due was not repaid. No pre-existing dispute as per S. 5(6) of the Code stands proved on the side of the Corporate debtor. Whether the applicant proved compliance of the requirement to be meted out u/s. 9(5) of the Code? - HELD THAT:- he applicant also succeeded in proving that the application filed is complete as per sub-section 2 of S.9 of the Code, that there is no payment of unpaid amount found liable to be paid by the Corporate Debtor, that the invoices and notice were delivered to the Corporate Debtor, that affidavit is filed in compliance of Section 9(3)(b) to the effect that there is no notice given by the Corporate Debtor relating to a dispute of the unpaid operational debt and that the bank statement copy is produced in compliance of S.9(3)(c). Since no resolution professional name was proposed, compliance of section 9(5)(i)(e) does not at all arise. The Application filed under Section 9 being proved to be complete, it is liable to be admitted. Taking judicial notice of delay in completing the resolution process by the IRP because of lack of adequate fund for meeting the initial expenses for initiating CIRP like publications in leading news papers etc. by the IRP. To overcome the said circumstances and to discourage IRP from spending the initial expenses from his or her own pocket, it appears to me that it is fair and just to direct the Applicant/Operational Creditor to deposit ₹ 2,00,000/- (Two lakhs) for the initial expenses to be spent by the IRP. Issues Involved:1. Whether the debt claimed by the Operational Creditor is due and payable by the Corporate Debtor.2. Whether there exists a pre-existing dispute under section 5(6) of the Insolvency and Bankruptcy Code, 2016.3. Relief and costs.Issue-wise Detailed Analysis:1. Debt Due and Payable:- The Operational Creditor, Agarwal Industries Private Limited, supplied goods to the Corporate Debtor, Amrit Feeds Limited, and claimed an unpaid amount of Rs. 19,57,025/- plus interest at 24% per annum.- The Operational Creditor provided evidence of the supply through transport challans and e-way bills, and the Corporate Debtor acknowledged the receipt of goods in various communications, including a reply to a demand notice and a writ petition filed before the High Court at Hyderabad.- The Corporate Debtor's inconsistent contentions, such as the alleged non-receipt of goods and fabricated invoices, were raised belatedly and were not substantiated.- The tribunal found the evidence provided by the Operational Creditor, including transport challans, e-way bills, and the Corporate Debtor's own admissions, sufficient to prove the delivery of goods and the debt due.2. Pre-existing Dispute:- The Corporate Debtor argued that there was a pre-existing dispute regarding the quality and quantity of goods supplied, as mentioned in their reply to the demand notice dated 10/04/2017.- However, the tribunal noted that the Corporate Debtor did not consistently deny the receipt of goods and raised the issue of defective goods only in response to the first demand notice.- The tribunal concluded that the Corporate Debtor did not prove any pre-existing dispute as defined under section 5(6) of the Insolvency and Bankruptcy Code, 2016.3. Relief and Costs:- The tribunal found the application filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, to be complete and in compliance with the necessary requirements.- The tribunal admitted the application for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.- A moratorium was declared as per Sections 13 and 15 of the Insolvency and Bankruptcy Code, 2016, prohibiting the institution or continuation of suits or proceedings, transferring or disposing of assets, and recovery of property by owners or lessors.- Mr. Ajay Kumar was appointed as the Interim Resolution Professional (IRP) to convene a Committee of Creditors and evolve a resolution plan.- The Operational Creditor was directed to deposit Rs. 2,00,000/- for initial expenses to be spent by the IRP, to be reimbursed by the Committee of Creditors after its constitution.Conclusion:The tribunal admitted the application for initiating CIRP against the Corporate Debtor, declared a moratorium, and appointed an IRP, directing the Operational Creditor to deposit Rs. 2,00,000/- for initial expenses. The tribunal found the debt due and payable by the Corporate Debtor and concluded that there was no pre-existing dispute under section 5(6) of the Insolvency and Bankruptcy Code, 2016.