2019 (7) TMI 1248 - Tri - Insolvency and Bankruptcy

Tribunal admits insolvency application, appoints Resolution Professional, declares moratorium

The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process ... Admissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate Debtor - default in repayment - Section 9 (2) and Section 9 (5) of IBC, 2016 - HELD THAT:- The present application in prescribed form is complete and the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. Form No. 2 of the proposed Interim Resolution Professional (IRP) has been filed vide diary No. 6581 dated 12.09.2018 and stipulated that no disciplinary proceedings are pending against with the board or the Insolvency Professional Agency - the present application is admitted, in terms of section 9 (5) (i)of IBC, 2016. Application admitted - moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).2. Existence of a pre-existing dispute.3. Non-payment of operational debt.4. Appointment of Interim Resolution Professional (IRP).5. Declaration of moratorium under Section 14 of IBC, 2016.Issue-wise Detailed Analysis:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of IBC, 2016:The application was filed by the Applicant, a unit of Modi Industries Limited, under Section 9 of IBC, 2016, read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Applicant sought to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for non-payment of operational debt amounting to Rs. 19,11,023.48/- along with interest at 18% per annum.2. Existence of a Pre-existing Dispute:The Corporate Debtor contended that there was a pre-existing dispute, citing that post-dated cheques were issued under the condition of confirmation on the final amount of goods supplied. However, the Applicant refuted this, stating that the confirmation was only regarding the dates of presenting the cheques to the bank. The Tribunal referred to the Supreme Court's ruling in Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd., which emphasized that a dispute must be genuine and not spurious, hypothetical, or illusory. The Tribunal found no substantial evidence supporting the Corporate Debtor's claim of a pre-existing dispute.3. Non-payment of Operational Debt:The Applicant provided evidence of unpaid invoices totaling Rs. 19,11,023.48/- and claimed interest amounting to Rs. 4,54,247.66/-, making a total of Rs. 23,65,271.14/-. Despite several requests and issuance of a demand notice under Section 8 of IBC, 2016, the Corporate Debtor neither paid the outstanding amount nor raised any dispute within the stipulated time. The Tribunal concluded that the debt was due and payable, and the Corporate Debtor defaulted on the payment.4. Appointment of Interim Resolution Professional (IRP):The Applicant proposed the name of Mr. Sandeep Chandana as the Interim Resolution Professional (IRP). The Tribunal, after verifying that no disciplinary proceedings were pending against the proposed IRP, appointed Mr. Sandeep Chandana as the IRP to carry out the functions as per the provisions of the IBC, 2016.5. Declaration of Moratorium under Section 14 of IBC, 2016:Upon admission of the application, the Tribunal declared a moratorium in terms of Section 14 of IBC, 2016, which included prohibitions on:- Institution or continuation of suits or proceedings against the Corporate Debtor.- Transferring, encumbering, alienating, or disposing of any assets of the Corporate Debtor.- Actions to foreclose, recover, or enforce any security interest created by the Corporate Debtor.- Recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor.The moratorium would be effective from the date of the order until the completion of the CIRP.Conclusion:The Tribunal, after considering the facts and evidence, admitted the application under Section 9 of IBC, 2016, and initiated the CIRP against the Corporate Debtor. The Tribunal appointed Mr. Sandeep Chandana as the IRP and declared a moratorium to protect the interests of the creditors and ensure the smooth conduct of the CIRP. The order was communicated to the Applicant, Corporate Debtor, and the Insolvency and Bankruptcy Board of India (IBBI) for necessary actions.