Tribunal Admits Petition, Initiates Insolvency Process, Appoints Interim Professional

The Tribunal admitted the petition, initiated the Corporate Insolvency Resolution Process, declared a moratorium, and appointed Mr. Umesh Ved as the Interim Resolution Professional. The petition was disposed of with no order as to costs, and a copy of the order was directed to be communicated to all relevant parties.

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Issues Involved:

1. Existence of operational debt and default.
2. Agreement on the payment of interest.
3. Acknowledgment of debt by the corporate debtor.
4. Validity and completeness of the application under the Insolvency and Bankruptcy Code, 2016.
5. Appointment of Interim Resolution Professional (IRP).
6. Declaration of moratorium and its implications.

Detailed Analysis:

1. Existence of Operational Debt and Default:

The applicant, an operational creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming an outstanding amount of Rs. 87,45,963/- with interest, totaling Rs. 1,33,49,908/-. The operational creditor supplied goods based on two purchase orders and raised ten invoices. The corporate debtor acknowledged the debt through an email dated 26.11.2017 and a Memorandum of Understanding (MOU) dated 05.12.2017, but failed to make the agreed payments.

2. Agreement on the Payment of Interest:

The corporate debtor contested the claim of interest, arguing that no agreement for payment of interest existed in the purchase orders. However, the Tribunal noted that each invoice issued by the operational creditor contained a clause stipulating interest @ 18% on overdue payments. The Tribunal cited the decision of the Bombay High Court in Jatin Koticha v. VFC Industries (P.) Ltd., affirming that invoices with terms and conditions, including interest, constitute a written contract.

3. Acknowledgment of Debt by the Corporate Debtor:

The corporate debtor acknowledged the debt in multiple instances, including an email dated 26.11.2017 and an MOU dated 05.12.2017. Additionally, the corporate debtor issued 19 undated cheques and admitted default in a communication dated 08.03.2018, requesting the operational creditor not to deposit the post-dated cheques. The Tribunal found these acknowledgments sufficient to establish the debt and default.

4. Validity and Completeness of the Application:

The Tribunal confirmed that the application was in the proper format as prescribed under the Insolvency and Bankruptcy Code, 2016, and was complete in all respects. The Tribunal referred to the Supreme Court judgments in Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. and Innoventive Industries v. ICICI Bank Ltd., which outline the criteria for admitting an application under Section 9 of the Code. The Tribunal found that the operational debt exceeded Rs. 1.00 lakh, the debt was due and payable, and no dispute existed between the parties.

5. Appointment of Interim Resolution Professional (IRP):

The applicant proposed Mr. Umesh Ved as the Interim Resolution Professional (IRP). The Tribunal appointed him as the IRP under Section 13(1)(c) of the Code and directed him to make a public announcement of the initiation of the Corporate Insolvency Resolution Process (CIRP) and call for submission of claims as required by Section 15 of the Code.

6. Declaration of Moratorium and Its Implications:

The Tribunal declared a moratorium as per Section 14 of the Code, prohibiting the institution or continuation of suits or proceedings against the corporate debtor, transferring or disposing of assets, and recovery of property by owners or lessors. The moratorium ensures the supply of essential goods and services to the corporate debtor is not interrupted during the CIRP. The moratorium will remain effective until the completion of the CIRP, approval of the resolution plan, or an order for liquidation.

Conclusion:

The Tribunal admitted the petition, initiated the Corporate Insolvency Resolution Process, declared a moratorium, and appointed Mr. Umesh Ved as the Interim Resolution Professional. The petition was disposed of with no order as to costs, and a copy of the order was directed to be communicated to all relevant parties.

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