2020 (2) TMI 1122 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Petition, Declares Moratorium

The Tribunal admitted the petition under Section 9 of The Insolvency and Bankruptcy Code, 2016, declaring a moratorium and appointing an Interim ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of dispute or not - HELD THAT:- Records show that the respondent had made last payment on 30.06.2016 i.e. after the last invoice dated 06.04.2016 was raised by the applicant and the said fact is also admitted by the corporate debtor. Moreover, no document like debit note or any complaint in writing regarding inferior quality of the material eve raised and/or produced on record to support the contention. On one hand the respondent claims that the goods supplied were of inferior quality, on the other hand record shows that the respondent had made last payment on 30.06.2016. Had there been any serious complaint about the quality of goods supplied by the applicant, the respondent should have returned the goods and/or would have retained the payment. On perusal of the records it is also found that only after filing the instant application by the operational creditor the respondent has raised the dispute regarding the quality of goods. It is also a matter on record that the respondent never raised any dispute on receipt of demand notice issued under Section 8 of the I & B Code and has also admitted in reply that the corporate debtor has not replied to the demand notice by way of raising any dispute. This adjudicating authority is of the considered view that operational debt is due to the Applicant and it fulfilled the requirement of IB Code as enshrined in the Code. Moreover, the corporate debtor admitted in his reply that he has already made part payment towards the total dues so claimed by the applicant. That, service is complete and no dispute has been raised by the respondent at any point of time. 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 and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force. The Application filed by the Applicant is complete in all respects and is in accordance with the I & B Code and the Rules made thereunder - 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 under Section 9 of The Insolvency and Bankruptcy Code, 2016 for operational debt.2. Dispute regarding quality of goods supplied.3. Adjudication of the application and appointment of Interim Resolution Professional.Analysis:1. The petitioner, an operational creditor, filed a petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 against the respondent, a corporate debtor, for non-payment of dues amounting to Rs. 31,74,197 for goods supplied between 15.10.2015 to 06.04.2016. The respondent alleged that the goods supplied were of inferior quality and requested a credit note. However, no evidence was provided to substantiate the claim of inferior quality. The respondent's failure to return the goods or raise complaints earlier raised doubts on the authenticity of the claim. The respondent also failed to dispute the demand notice issued under Section 8 of the Code, further weakening their defense.2. The Tribunal referred to the case of Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. and highlighted the conditions to be met for admitting an application under Section 9 of the Act. It was observed that the operational debt was due and payable, the respondent had made partial payments, and no dispute was raised by the respondent. The Tribunal found that the petitioner had fulfilled the requirements of the Insolvency & Bankruptcy Code, and the debt claimed was legally payable by the corporate debtor. Consequently, the Tribunal admitted the petition, declared a moratorium, and directed the Insolvency Resolution Professional to initiate the Corporate Insolvency Resolution Process.3. The Tribunal ordered a moratorium under Section 13 of the Code, prohibiting suits, asset transfers, and recovery actions against the corporate debtor. Essential services to the debtor were to continue during the moratorium period. An Interim Resolution Professional was appointed to oversee the resolution process. The Tribunal emphasized the importance of maintaining the status quo to facilitate the resolution process and directed the Registrar of Companies to refrain from initiating any proceedings that could hinder the insolvency resolution process.By meticulously analyzing the evidence presented, the Tribunal concluded that the petition met the legal criteria for admission, leading to the declaration of a moratorium and the appointment of an Interim Resolution Professional to manage the insolvency resolution process effectively.