Tribunal Admits Creditor's Petition for Insolvency Against Debtor The Tribunal admitted the operational creditor's petition under Sec.9 of the Insolvency & Bankruptcy Code, 2016 against the corporate debtor for ...
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Tribunal Admits Creditor's Petition for Insolvency Against Debtor
The Tribunal admitted the operational creditor's petition under Sec.9 of the Insolvency & Bankruptcy Code, 2016 against the corporate debtor for defaulting on payment. Despite the corporate debtor's claims of quality issues with supplied materials, the Tribunal found no material dispute and approved the appointment of an Interim Resolution Professional. The Corporate Insolvency Resolution Process was initiated, and the operational creditor was directed to pay an advance fee for the resolution process. The Resolution Professional was tasked to conduct the process in a time-bound manner, with progress reports required, and the order to be communicated to all parties involved.
Issues: Petition under Sec.9 of the Insolvency & Bankruptcy Code, 2016 for initiation of corporate insolvency resolution process due to default in payment by the corporate debtor.
Analysis: 1. The operational creditor filed a petition under Sec.9 of the Insolvency & Bankruptcy Code, 2016 against the corporate debtor for defaulting on payment amounting to Rs. 83,27,646/-, including interest. The operational creditor supplied materials as per purchase orders, and the corporate debtor partially paid but failed to clear the balance amount.
2. The operational creditor also obtained a decree from the Hon'ble High Court, Calcutta, directing the corporate debtor to pay Rs. 74,10,686/- with interest. Despite this decree, the corporate debtor did not comply with the court's order.
3. The corporate debtor raised a point about filing an application before the High Court to recall the decree, but the operational creditor argued that no material was provided to substantiate this claim. The operational creditor presented evidence of supply orders, inspection certificates, invoices, and payment receipts to support their case.
4. The corporate debtor claimed quality issues with the supplied materials, leading to rejection by the railway, causing financial losses. However, the operational creditor countered this claim by stating that the materials were approved by RITES Ltd., and no rejection occurred as per an RTI inquiry.
5. The Tribunal noted that the operational creditor's supplies were used by the corporate debtor to manufacture products for the railway after inspection by RITES Ltd. The High Court's decree in favor of the operational creditor remained unfulfilled, and the corporate debtor's application to recall the decree was dismissed.
6. The Tribunal found no material dispute raised by the corporate debtor, except oral allegations, prior to the insolvency petition. As per Sec.5(6) of the Code, an operational debt was due, and a default had occurred, leading to the admission of the operational creditor's application.
7. The Tribunal approved the appointment of an Interim Resolution Professional and declared a moratorium, initiating the Corporate Insolvency Resolution Process against the corporate debtor. The operational creditor was directed to pay an advance fee to the IRP for the resolution process.
8. The Resolution Professional was tasked to conduct the Corporate Insolvency Resolution Process in a time-bound manner, with the matter listed for a progress report filing. The order was to be communicated to all parties involved, and a certified copy would be issued upon formal application.
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