Tribunal rules in favor of creditor, initiates insolvency process

The tribunal found in favor of the operational creditor, establishing the existence of debt exceeding Rs. 1.00 lakh and default by the corporate debtor. An Interim Resolution Professional (IRP) was appointed, initiating the Insolvency Resolution Process. A moratorium was declared, prohibiting legal actions against the debtor. Essential services supply to the debtor was to continue uninterrupted. The moratorium would be in effect until the completion of the resolution process or liquidation. The petition was disposed of without costs, with the registry instructed to inform the Registrar of Companies to safeguard the debtor.

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Issues Involved:
1. Existence of operational debt exceeding Rs. 1.00 lakh.
2. Documentary evidence showing the debt is due and payable.
3. Existence of a dispute or pending suit/arbitration before the demand notice.

Detailed Analysis:

Existence of Operational Debt:
The applicant, an operational creditor, supplied goods to the respondent, a corporate debtor, based on purchase orders. The respondent initially made payments but later defaulted, leaving an outstanding amount of Rs. 1,91,40,826. Despite repeated reminders and legal notices, the debt remained unpaid. The applicant also highlighted a settlement agreement dated 11.05.2018, where the respondent acknowledged the debt and issued post-dated cheques, which were dishonored, leading to a total due amount of Rs. 3,51,02,340.

Documentary Evidence:
The applicant submitted various documents, including Form No. 5, supporting affidavits, board resolutions, orders from the Commercial Court, settlement agreements, computation of the amount and dates of default, bank statements, legal notices, and demand notices. These documents provided evidence that the debt was due and payable but remained unpaid.

Existence of Dispute:
The respondent did not appear before the tribunal nor submitted any reply despite notices. The tribunal noted that no dispute was raised by the respondent regarding the debt. The tribunal also considered the Hon'ble Supreme Court judgment and provisions of the Insolvency & Bankruptcy Code, concluding that the operational debt was due and there was no dispute.

Judgment:
The tribunal found that the application was complete in all respects and the operational creditor had established the existence of debt and occurrence of default. The tribunal appointed an Interim Resolution Professional (IRP) and initiated the Insolvency Resolution Process. A moratorium was declared prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the corporate debtor. The tribunal directed that the supply of essential services to the corporate debtor should not be interrupted during the moratorium period. The order of moratorium would be effective until the completion of the corporate insolvency resolution process or until a resolution plan is approved or liquidation is ordered. The petition was disposed of with no order as to costs, and the registry was directed to inform the Registrar of Companies about the corporate insolvency resolution process to prevent detrimental actions against the respondent company.

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