Tribunal rules in favor of operational creditor in insolvency application, debt recovery process initiated.

The Tribunal ruled in favor of the operational creditor in an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, for recovery of outstanding debt from the corporate debtor. The debt amounting to Rs. 2,90,38,856.00 was deemed due, with no dispute raised by the respondent. An interim resolution professional was appointed, and the application was admitted, leading to the initiation of the insolvency resolution process with the imposition of restrictions under Section 14 of the Code.

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Issues: Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for recovery of outstanding debt by an operational creditor against a corporate debtor.

Analysis:
1. Operational Creditor's Claim: The operational creditor filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking recovery of outstanding debt from the corporate debtor. The debt arose from business transactions involving the supply of hot and cold rolled steel plates, with invoices totaling to Rs. 2,90,38,856.00 remaining unpaid as of 13.10.2016. The operational creditor claimed an additional interest amount of Rs. 2,23,52,365.00 at the rate of 21% per annum.

2. Submission of Operational Creditor: The operational creditor contended that the corporate debtor failed to settle the outstanding debt despite receiving goods and acknowledging the liability by issuing undated cheques. The operational creditor followed standard business practices with a credit period of 60 days for each invoice, beyond which interest was applicable. A police complaint was filed, and a residential flat worth Rs. 45.00 lacs was handed over as security by the corporate debtor.

3. Respondent's Objections: The respondent, the corporate debtor, objected to the application, alleging suppression of facts and the existence of a civil suit regarding the quality of materials supplied. The respondent claimed that the operational creditor did not adhere to the purchase order terms, raised invoices without delivering goods, and filed a false affidavit regarding the demand notice and reply dates.

4. Judicial Findings: The Tribunal examined the documents and objections presented by both parties. It noted the absence of concrete evidence supporting the respondent's objections and the failure to produce documents validating the rejection of goods or debit notes. The Tribunal emphasized the criteria for admitting an application under Section 9, including the existence of an operational debt exceeding Rs. 1.00 lac, non-payment, and absence of a pending dispute.

5. Decision and Appointment: After thorough consideration, the Tribunal found in favor of the operational creditor, concluding that the debt was due, and no dispute was raised by the respondent. The application was deemed complete, and an interim resolution professional was appointed. The Tribunal admitted the application, declared a moratorium, and directed the continuation of essential services to the corporate debtor during the insolvency resolution process.

6. Final Orders: The Tribunal ordered the initiation of the insolvency resolution process, imposed restrictions under Section 14 of the Code, and specified the duration and effects of the moratorium. The petition was disposed of without costs, and copies of the order were directed to be communicated to all relevant parties involved in the proceedings.

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