2020 (1) TMI 471 - Tri - Insolvency and Bankruptcy

Tribunal Admits Company Petition for Insolvency, Validates Creditor's Claim, Initiates Resolution Process

The Tribunal admitted the Company Petition under section 9 of the Insolvency & Bankruptcy Code, 2016, initiating Corporate Insolvency Resolution ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - total debt due and payable - only contention raised is that the rates of transportation were much higher than charged by others and that there was connivance by some employees - HELD THAT:- There is no denial that they did not avail of the Operational Creditor's services for transportation. There is only a reference that charges were quite higher. However, there is no repudiation of the agreement dated 28.7.2015, 14.08.2015 and 01.06.2016 at any time - There is only an attempt to clutch at straws by saying that there was some connivance on the part of some of the Corporate Debtor's employees. However, even if this is accepted at face value, there may only be various other legal options for the Corporate Debtor to proceed against the employees in question. This would not have the effect of annulling the services provided by the Operational Creditor to the Corporate Debtor. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. Application admitted - moratorium declared. Issues:Company Petition under section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC) for Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor.Detailed Analysis:Jurisdiction and Background:The Company Petition was filed under section 9 of the IBC by an Operational Creditor against a Corporate Debtor, a public company incorporated under the Companies Act, 1956. The petition claimed non-payment of a substantial amount by the Corporate Debtor, establishing the jurisdiction of the Tribunal.Operational Creditor's Claim:The Operational Creditor provided transportation services to the Corporate Debtor and raised invoices for the same, which were acknowledged without objections. The total debt due was specified, along with interest rates for delayed payments. The Operational Creditor also served a Demand Notice to the Corporate Debtor, which was responded to with allegations of inflated invoices and connivance with employees.Corporate Debtor's Defence:The Corporate Debtor denied the claim, alleging collusion between the Operational Creditor and its employees to defraud the company. It claimed to have filed a police complaint against the Operational Creditor for criminal breach of trust and cheating. The Corporate Debtor argued that the delay in filing the complaint was due to the investigation process.Judicial Analysis and Decision:The Tribunal examined the arguments of both parties and found that the claim of the Operational Creditor was valid. It noted that the Corporate Debtor did not dispute availing the services but raised concerns about pricing and alleged connivance. However, the Tribunal ruled that even if there was connivance, it did not negate the services provided by the Operational Creditor. The Tribunal admitted the Petition and ordered the initiation of CIRP against the Corporate Debtor.Order and Moratorium:The Tribunal admitted the Petition, initiating CIRP against the Corporate Debtor. A moratorium was declared under section 14 of the IBC, affecting various legal actions against the Corporate Debtor. The management of the Corporate Debtor was vested in an Interim Resolution Professional (IRP), and specific directions were given regarding the conduct of the CIRP process.Conclusion:The Tribunal's decision to admit the Petition and initiate CIRP against the Corporate Debtor was based on the validity of the Operational Creditor's claim and the failure of the Corporate Debtor to disprove the debt. The detailed analysis of the claims and defences presented by both parties led to the Tribunal's ruling, setting in motion the insolvency resolution process for the Corporate Debtor.