2020 (4) TMI 865 - Tri - Insolvency and Bankruptcy

Chandigarh NCLT admits CIRP petition against corporate debtor for payment default

The National Company Law Tribunal (NCLT), Chandigarh Bench, admitted a petition for initiating the Corporate Insolvency Resolution Process (CIRP) against ... Admission of application under section 9 of the Code - service and sufficiency of demand notice in Form 3/4 - absence of notice of dispute - plausibility test (Mobilox standard) - limitation for operational debt - computation from contractual due date - moratorium under section 14 of the Code - appointment of Interim Resolution Professional under section 16 of the CodeService and sufficiency of demand notice in Form 3/4 - absence of notice of dispute - plausibility test (Mobilox standard) - The demand notice in Form 3/4 was duly delivered to the corporate debtor and no notice of dispute was communicated within the statutory period. - HELD THAT: - The Tribunal found that the operational creditor served the demand notice dated 04-01-2018 and produced the tracking report showing delivery (Annexure D) and the supporting affidavit. The corporate debtor did not reply to the demand notice within the stipulated period, and therefore did not bring to the operational creditor's notice any dispute in the prescribed manner. Applying the standard that the Adjudicating Authority must reject only a dispute that is bona fide and plausible (as explained in Mobilox), the Tribunal held that absence of a reply amounted to no notice of dispute and supported admission of the application. [Paras 5, 14]Demand notice was delivered and no notice of dispute was received; this condition under section 9(5)(i) is satisfied.Absence of notice of dispute - plausibility test (Mobilox standard) - effect of debit notes as evidence - The debit notes relied on by the corporate debtor do not constitute sufficient evidence of a plausible dispute to defeat the petition. - HELD THAT: - The corporate debtor produced debit notes allegedly adjusting losses; the operational creditor denied receipt. The Tribunal examined the material and concluded the debit notes were insufficient to establish a credible dispute at the admission stage. Further, even if the debit notes were accepted, after deducting their effect the admitted claim would still exceed the statutory threshold required for admission. The Tribunal therefore treated the debit notes as inadequate to vitiate admission under section 9. [Paras 12, 13, 14]The debit notes do not amount to a plausible dispute that would require rejection of the application.Limitation for operational debt - computation from contractual due date - The petition is within limitation; limitation begins from the contractual due date of payment and not merely from the dates of earlier invoices. - HELD THAT: - The Tribunal relied on the ledger and bank statement to infer that the last payment relevant to the invoices was on 22-07-2015 and that the due date for the last invoice dated 23-07-2015 was 22-08-2015. Accordingly, the period of limitation commenced from 22-08-2015, and the petition filed on 17-08-2018 was held to be within the limitation period for initiating proceedings under section 9. [Paras 15]Limitation period commenced on 22-08-2015 and the petition filed on 17-08-2018 is within time.Admission of application under section 9 of the Code - The application under section 9 is admitted and the Corporate Insolvency Resolution Process is ordered to be initiated against the corporate debtor. - HELD THAT: - Having found that the operational debt remained unpaid, that the demand notice was delivered and no effective notice of dispute was received, and that the petition was within limitation, the Tribunal held that the conditions of section 9(5)(i) were satisfied. In consequence the petition was admitted and the Tribunal proceeded to direct initiation of CIRP. [Paras 17, 18]The petition under section 9 is admitted and CIRP is initiated against the corporate debtor.Moratorium under section 14 of the Code - A moratorium under section 14 is declared with effect from the date of the order until completion of the CIRP or further order. - HELD THAT: - On admission of the section 9 application the Tribunal declared the moratorium in terms of section 14(1), restraining institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property by lessors, and directed that supply of essential goods or services not be terminated during the moratorium subject to statutory exceptions. [Paras 19, 20, 21]Moratorium under section 14 is declared from the date of the order until completion of CIRP or further order.Appointment of Interim Resolution Professional under section 16 of the Code - Mr. Ashok Kumar Singla is appointed as Interim Resolution Professional in terms of the Code and directions are issued regarding his functions and duties. - HELD THAT: - As the operational creditor did not propose an IRP, the Tribunal acted pursuant to section 16(3)(a) and the Board's recommendation. The Tribunal selected Mr. Ashok Kumar Singla from the approved panel, verified there was nothing adverse on record, and appointed him as Interim Resolution Professional. The Tribunal specified the scope and duration of his role, directed public announcement, inventory and claim collation, constitution of the committee of creditors, and regular progress reporting to the Tribunal. [Paras 22, 23, 24, 25]Mr. Ashok Kumar Singla is appointed as Interim Resolution Professional with specified duties and directions.Final Conclusion: The Tribunal admitted the application under section 9, held the demand notice to be duly served and no plausible dispute established, found the petition within limitation, declared moratorium under section 14 and appointed Mr. Ashok Kumar Singla as Interim Resolution Professional to conduct the CIRP. Issues Involved:1. Jurisdiction and Territorial Authority2. Services Provided and Payment Default3. Demand Notice and Response4. Allegations by Corporate Debtor5. Rejoinder by Operational Creditor6. Limitation Period7. Admission of Petition and Initiation of CIRP8. Appointment of Interim Resolution Professional (IRP)9. Declaration of MoratoriumIssue-wise Detailed Analysis:1. Jurisdiction and Territorial Authority:The respondent-corporate debtor is incorporated under the Companies Act, 1956, with its registered office in District Ludhiana, Punjab, falling within the territorial jurisdiction of the National Company Law Tribunal (NCLT), Chandigarh Bench.2. Services Provided and Payment Default:The petitioner-operational creditor provided transportation, detention, and warehousing services to the respondent-corporate debtor from 28-09-2010 to 23-07-2015. The corporate debtor defaulted in paying Rs. 19,19,471/- for these services.3. Demand Notice and Response:The petitioner sent a demand notice in Form 3 & 4 dated 04-01-2018, which was delivered to the respondent on 17-01-2018. The petitioner did not receive any reply within the stipulated 10 days, nor was any dispute communicated by the respondent.4. Allegations by Corporate Debtor:The respondent contended that the petition was barred by limitation, as most bills were from 2010 to 2014. They also alleged damages caused by the petitioner during transportation and warehousing, settled via debit notes dated 30-04-2017 amounting to Rs. 17 lacs.5. Rejoinder by Operational Creditor:The petitioner denied receiving any debit notes and challenged their authenticity. It was argued that the claims by the respondent were false and misleading, created to avoid liabilities.6. Limitation Period:The last payment of Rs. 50,000/- was received on 22-07-2015, and the due date for the last invoice was 22-08-2015. The petition filed on 17-08-2018 was within the limitation period, as the limitation starts from 22-08-2015.7. Admission of Petition and Initiation of CIRP:The petition met the conditions of section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016. The operational debt remained unpaid, and the demand notice was delivered without any dispute raised by the corporate debtor. Thus, the petition was admitted for initiating the Corporate Insolvency Resolution Process (CIRP).8. Appointment of Interim Resolution Professional (IRP):Mr. Ashok Kumar Singla was appointed as the Interim Resolution Professional. His credentials were verified, and no adverse findings were reported. His duties include taking control and custody of the corporate debtor's assets, making a public announcement, constituting a committee of creditors, and filing regular progress reports.9. Declaration of Moratorium:A moratorium was declared under section 14 of the Code, prohibiting:- Institution or continuation of suits or proceedings against the corporate debtor.- Transferring or disposing of any assets of the corporate debtor.- Actions to foreclose or recover any security interest.- Recovery of property occupied by the corporate debtor.The moratorium remains effective until the completion of the CIRP or until a resolution plan is approved or liquidation is ordered.This comprehensive analysis covers all relevant issues, ensuring a thorough understanding of the judgment while preserving the legal terminology and significant phrases from the original text.