2019 (8) TMI 1304 - Tri - Insolvency and Bankruptcy

Company Insolvency Petition Admitted: Debt Validated, Moratorium Declared

The National Company Law Tribunal, Mumbai Bench, admitted the Company Petition seeking Corporate Insolvency Resolution Process against a Corporate Debtor ... Initiation of CIRP - Corporate Debtor committed default in making payment - Section 9 of Insolvency and Bankruptcy Code (hereinafter called “Code”) read with Rule 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- The Corporate Debtor filed reply to the petition stating that the Petitioner is misusing the Code and further stated that charging an interest @18% p.a. is not in terms of the agreement entered into between the Petitioner and the Corporate Debtor. However, the invoices annexed by the Petitioner clearly reveals that the Petitioner is entitled to charge interest @18% p.a. on the delayed payments - This Bench on going through the Petition and after hearing the submissions of the Counsel for both sides came to the conclusion that there is debt and default. This Bench having been satisfied with the Petition filed by the Operational Creditor which is in compliance of provisions of section 9 of the Insolvency and Bankruptcy Code admits this Petition declaring moratorium - petition admitted. Issues:1. Alleged default in payment by the Corporate Debtor2. Validity of the demand notice issued under Section 8 of the Code3. Dispute regarding charging interest on delayed payments4. Admittance of the Company Petition and declaration of moratoriumIssue 1: Alleged default in payment by the Corporate DebtorThe Company Petition was filed seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on a payment of &8377; 15,62,438/- along with interest. The Petitioner had provided SMS push messaging services to the Corporate Debtor as per an agreement dated 18.03.2016, under which invoices were raised amounting to &8377; 14,46,192/-. Despite reminders and a demand notice issued under Section 8 of the Code, the payment was not made by the Corporate Debtor. The Corporate Debtor, in response, cited financial issues but did not dispute the debt.Issue 2: Validity of the demand notice issued under Section 8 of the CodeThe Corporate Debtor, in its reply to the demand notice, acknowledged the outstanding amount but cited financial difficulties as the reason for non-payment. However, the Petitioner affirmed that no notice of dispute had been received from the Corporate Debtor. The Corporate Debtor contended that the Petitioner was misusing the Code, but the Bench found that the invoices supported the claim for interest at 18% p.a. on delayed payments.Issue 3: Dispute regarding charging interest on delayed paymentsThe Corporate Debtor disputed the interest rate of 18% p.a., claiming it was not in line with the agreement. However, the Bench, upon reviewing the petition and submissions from both parties, concluded that there was indeed a debt and default. The Bench found the Petitioner entitled to charge interest at the agreed rate based on the invoices submitted.Issue 4: Admittance of the Company Petition and declaration of moratoriumAfter considering the arguments and evidence presented, the Bench admitted the Company Petition and declared a moratorium. The moratorium included prohibiting suits against the Corporate Debtor, ensuring the continuity of essential goods or services, and appointing an interim resolution professional. The moratorium was to be in effect until the completion of the corporate insolvency resolution process or until a resolution plan was approved or liquidation was ordered.This judgment by the National Company Law Tribunal, Mumbai Bench, involved a detailed analysis of the alleged default in payment by the Corporate Debtor, the validity of the demand notice issued under Section 8 of the Code, the dispute over charging interest on delayed payments, and the subsequent admittance of the Company Petition with the declaration of a moratorium. The decision highlighted the importance of adherence to contractual terms, the provisions of the Insolvency and Bankruptcy Code, and the establishment of a moratorium to facilitate the resolution process effectively.