2019 (7) TMI 60 - Tri - Insolvency and Bankruptcy

Tribunal admits insolvency application against corporate debtor, appoints Interim Resolution Professional

M/s. Avon Clothing Private Limited Versus Siddarth Intercrafts Private Limited And Anothers

The Tribunal admitted the application filed by M/s. Avon Clothing Private Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016 against M/s. ... Initiation of Corporate Insolvency process - section 9 of Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Whether the debt and default are challenged by corporate debtor? - Whether the dispute as raised by the corporate debtor is genuine or can be categorised as moonshine dispute? HELD THAT:- The corporate debtor has admitted the goods supplied, invoices raised and same being received by it. The corporate debtor has nowhere stated or objected/disputed the invoices or its contents prior to section 8 notice received. Post receiving the notice under section 8 from applicant the corporate debtor has made part payment without raising notice of dispute to the Operational Creditor. There is no correspondence placed on record by corporate debtor prior to issuance of demand notice to establish pre-existing dispute, on the contrary there is one settlement referred to between the parties of which again no document is on record. The objections are all after receiving demand notice and no concrete proof shown of debit notes as raised by Corporate Debtor being sent and received by applicant. The defence raised of dispute is lame and without any supporting evidence can be categorised as moonshine dispute. The default occurred from 22.03.2017, from the date of issue of loan recalling notice and demanding payment of debt hence the debt is not time barred and the application is filed within the period of limitation - the present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt. In the light of above facts and records the present application deserves to be admitted. Application admitted in terms of Section 9(5) of IBC, 2016 and moratorium as envisaged under the provisions of Section 14(1) shall follow in relation to the Corporate Debtor prohibiting all of the actions mentioned under section 14(1)(a) to (d). Issues Involved:1. Debt and Default2. Dispute Raised by Corporate Debtor3. Jurisdiction4. Limitation5. Appointment of Interim Resolution Professional (IRP)6. MoratoriumIssue-wise Detailed Analysis:1. Debt and Default:The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the operational creditor, M/s. Avon Clothing Private Limited, against the corporate debtor, M/s Siddarth Intercrafts Private Limited. The applicant claimed an outstanding amount of Rs. 20,16,921/- for the supply of grey cloth, which was not paid by the corporate debtor despite several reminders and a demand notice. The corporate debtor admitted to the supply of goods and receipt of invoices but raised objections regarding the quality, quantity, and timing of the supply.2. Dispute Raised by Corporate Debtor:The corporate debtor raised multiple objections, including issues with the quality and quantity of goods, authorization of the applicant's representative, incomplete bank statements, and non-compliance with Section 9(3)(c) of the Code. The applicant countered these objections, stating that the objections were technical and had been addressed. The Tribunal found the objections to be trivial and unsupported by concrete evidence, categorizing them as a 'moonshine dispute.' The Tribunal referred to precedents from the Supreme Court and High Courts, emphasizing that a genuine dispute must be supported by evidence and not be a mere afterthought.3. Jurisdiction:The registered office of the corporate debtor is situated in Jaipur, giving the Tribunal jurisdiction to entertain the application.4. Limitation:The default occurred on 22.03.2017, and the application was filed within the period of limitation, making it timely and valid.5. Appointment of Interim Resolution Professional (IRP):The applicant named Mr. Brij Kishore Sharma as the Interim Resolution Professional, who was duly appointed by the Tribunal. The IRP was directed to perform his functions as per Sections 15, 17, 18, 19, 20, and 21 of the Code, with all personnel connected with the corporate debtor required to cooperate with the IRP.6. Moratorium:Upon admission of the application, a moratorium under Section 14(1) of the Code was declared, prohibiting actions against the corporate debtor. The moratorium would remain effective until the completion of the corporate insolvency resolution process or until an order for liquidation or approval of a resolution plan is passed.Conclusion:The Tribunal found the application to be complete and the applicant entitled to claim its dues. The objections raised by the corporate debtor were deemed trivial and unsupported by evidence. The application was admitted under Section 9(5) of the Insolvency and Bankruptcy Code, 2016, and a moratorium was declared. The IRP was appointed to manage the corporate insolvency resolution process, with all relevant parties required to cooperate. The application was disposed of in terms of the above order.