Insolvency Application Admitted, Operational Debt of Rs. 93,24,741.46 Found

The application under Section 9 of the Insolvency & Bankruptcy Code, 2016 was admitted by the Tribunal. An outstanding operational debt of Rs. 93,24,741.46 was found against the Corporate Debtor, with no substantial evidence of a pre-existing dispute. Mr. Renahan Vamakeshan was appointed as the Interim Resolution Professional, and a moratorium was declared to prohibit legal actions against the Corporate Debtor and asset disposals. The moratorium would remain in effect until the completion of the Corporate Insolvency Resolution Process or liquidation order.

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Issues Involved:
1. Jurisdiction and maintainability of the application.
2. Existence of operational debt and default.
3. Pre-existing dispute between the parties.
4. Admissibility of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
5. Appointment of Interim Resolution Professional (IRP).

Detailed Analysis:

1. Jurisdiction and Maintainability of the Application:
The application was filed by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016, against the Corporate Debtor, a company registered under the Companies Act, 1956. The Corporate Debtor was incorporated on 21.02.1986 and has its registered office in Thiruvananthapuram, Kerala, thus falling within the territorial jurisdiction of the Tribunal.

2. Existence of Operational Debt and Default:
The Corporate Debtor placed multiple work orders with the Operational Creditor for various civil and interior works, with an aggregate value of Rs. 6,20,34,674.21 excluding taxes. The Operational Creditor raised invoices periodically, and the Corporate Debtor made partial payments totaling Rs. 5,97,48,529. The Corporate Debtor acknowledged the outstanding amount on 23.09.2015 and issued a Completion Certificate on 03.11.2015. Despite reminders and partial payments, an outstanding amount of Rs. 93,24,741.46 remained unpaid.

3. Pre-Existing Dispute Between the Parties:
The Corporate Debtor argued that the application was not maintainable due to a pre-existing dispute, claiming no sanction for additional work and alleging fraudulent activities by some officers. The Corporate Debtor also disputed the authenticity of the signed agreement dated 23.09.2015. However, the Operational Creditor refuted these claims, providing email communications and partial payments as evidence of the Corporate Debtor's acknowledgment of the debt. The Tribunal found no substantial evidence of a pre-existing dispute, deeming the Corporate Debtor's claims as frivolous and made to evade payment.

4. Admissibility of the Application Under Section 9 of the Insolvency & Bankruptcy Code, 2016:
The Tribunal concluded that the application was complete in all respects and met the requirements under Section 9 of the Code. The debt amount claimed exceeded the threshold of Rs. 1,00,000, and there was no credible evidence of a pre-existing dispute. The Tribunal found that the Corporate Debtor's arguments were unsupported by substantial documentation, leading to the admission of the application.

5. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Renahan Vamakeshan as the Interim Resolution Professional (IRP) to carry out the functions under the Insolvency & Bankruptcy Code. The Operational Creditor was directed to deposit Rs. 2 lakhs with the IRP to cover initial expenses, subject to adjustment by the Committee of Creditors.

Order:
The application IBA/42/KOB/2019 was admitted, and a moratorium was declared prohibiting:
(a) Institution or continuation of suits/proceedings against the Corporate Debtor.
(b) Transfer, encumbrance, alienation, or disposal of the Corporate Debtor's assets.
(c) Foreclosure, recovery, or enforcement of any security interest.
(d) Recovery of property by an owner or lessor occupied by the Corporate Debtor.

The moratorium would remain effective until the completion of the Corporate Insolvency Resolution Process or approval of the resolution plan or liquidation order. The Tribunal directed immediate public announcement of the Corporate Insolvency Resolution Process and communication of the order to relevant parties.

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