2020 (3) TMI 24 - Tri - Insolvency and Bankruptcy

Tribunal grants CIRP for Operational Creditor, appoints IRP, and declares moratorium.

The Tribunal found in favor of the Operational Creditor, admitting the application for Corporate Insolvency Resolution Process (CIRP), declaring a ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - pre-existing dispute or not - HELD THAT:- It becomes clear that material was to be returned by the Corporate Debtor to the godown of the Operational Creditor between 9 a.m. to 5 p.m., Sunday being holiday and the hire charges were to be calculated from the date of issue of the material till the same is received back at the godown of the Operational Creditor. It is also noted that when the material is delivered, it was the choice of the Corporate Debtor to have authorized agent to conduct inspection of the material, if required, after which no complaint was to be entertained by the Operational Creditor as per the terms and conditions, which are clear and unambiguous. The defence that has been projected by Counsel for the Corporate Debtor is hollow, as the same is not substantiated with any documentary evidence. It is an admitted fact that the material supplied has been used by the Corporate Debtor which is still in its possession. Therefore, the Corporate Debtor cannot deny the liability; the dispute raised is spurious, mere bluster and an afterthought. The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This Bench is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt as claimed by the Operational Creditor - Application admitted - moratorium declared. Issues involved:Application under Section 9 of I&B Code, 2016 for CIR Process, Moratorium, and IRP appointment.Detailed Analysis:1. Factual Background and Submissions:The Operational Creditor filed an application under Section 9 of the I&B Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP), declaration of Moratorium, and appointment of an Interim Resolution Professional (IRP). The Operational Creditor provided evidence of the agreement for renting scaffolding products to the Corporate Debtor, subsequent supply of materials, raised invoices, and non-payment by the Corporate Debtor. The Corporate Debtor contested the claim, alleging that the material supplied was not as per order, remained unused, and disputing the rent amount. The Corporate Debtor also raised issues regarding the security deposit and misuse of blank cheques.2. Legal Analysis and Decision:The Tribunal examined the terms and conditions of the agreement between the parties, which clearly outlined the responsibilities regarding material delivery, inspection, and payment of hire charges. The Corporate Debtor's defense was found to be unsubstantiated and lacking merit, as the material supplied had been used and was still in its possession. The Tribunal held that the Corporate Debtor had defaulted in payment, admitted the application, and ordered the commencement of CIRP within 180 days.3. Moratorium and IRP Appointment:The Tribunal declared a moratorium from the date of the order until the completion of CIRP, prohibiting various actions against the Corporate Debtor's assets. An IRP was appointed to manage the Corporate Debtor's affairs, with directions to comply with the provisions of the I&B Code and call for claim submissions. The Directors and management were directed to cooperate with the IRP, and the Registry was instructed to communicate the order to all relevant parties promptly.In conclusion, the Tribunal found in favor of the Operational Creditor, admitted the application for CIRP, declared a moratorium, appointed an IRP, and issued necessary directions for the resolution process to proceed in accordance with the I&B Code, 2016.