2019 (9) TMI 1189 - Tri - Insolvency and Bankruptcy

Successful Application for Insolvency: Operational Creditor Granted Relief Under Insolvency and Bankruptcy Code

The application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an operational creditor against a corporate debtor was successful. ... Maintainability of application - initiation of CIRP - Corporate debtor - operation debt - existence of dispute or not - HELD THAT:- This adjudicating authority is of the considered view that operational debt is due to the Applicant and in support of that operational creditor has placed copy of the invoices at page No. 38 to 45 to the application. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default - the Application filed by the Applicant is complete in all respects. It is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - Petition admitted - moratorium declared. Issues:1. Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for triggering Insolvency Resolution Process.2. Existence of operational debt exceeding Rs. 1.00 lac.3. Documentary evidence showing the debt is due and payable.4. Existence of a dispute between the parties.5. Appointment of an Interim Insolvency Professional.6. Declaration of moratorium under Section 14 of the Code.Analysis:1. The applicant, an operational creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Insolvency Resolution Process against the respondent, a corporate debtor. The applicant provided labor services to the respondent, and an outstanding debt of Rs. 6,92,043 was acknowledged by the respondent through various letters and part payments. The respondent did not dispute the claim, and a demand notice was duly served.2. The applicant established the existence of operational debt exceeding Rs. 1.00 lac, supported by documentary evidence such as invoices, correspondence, and acknowledgment of debt by the respondent. The respondent did not raise any dispute against the claim, confirming the due and payable nature of the debt.3. The adjudicating authority examined the application under Section 9 of the Code, considering the requirements related to operational debt, documentary evidence, and the absence of a dispute. The authority referred to the Legislative Guide on Insolvency Law, emphasizing the need to assess if the debt is subject to a legitimate dispute or set off.4. Based on the evidence presented, the adjudicating authority concluded that the operational debt was due to the applicant, and the applicant met the criteria of an Operational Creditor under the Code. The application was deemed complete, and an Interim Insolvency Professional was appointed to oversee the process.5. The authority declared a moratorium under Section 14 of the Code, prohibiting various actions against the corporate debtor, including suits, asset transfers, enforcement of security interests, and recovery of property. The moratorium was to be in effect until the completion of the insolvency resolution process or liquidation of the corporate debtor.6. The application was admitted, and the moratorium was declared, ensuring the continuation of essential services to the corporate debtor. The order of moratorium was to remain in effect until the resolution process was completed or liquidation was ordered. The communication of the order was directed to all relevant parties involved.This detailed analysis covers the key issues addressed in the judgment, highlighting the legal proceedings and decisions made by the adjudicating authority in the context of insolvency and bankruptcy laws.