2020 (6) TMI 524 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application Against Corporate Debtor in Dispute Over Outstanding Payments

ECO Drilling Fluids P. Ltd. Versus DSTR Infrastructures And Projects LLP

The Tribunal admitted the application under section 9 of the Insolvency and Bankruptcy Code, 2016, filed by a private limited company against a Corporate ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - Jurisdiction - HELD THAT:- The corporate debtor has tried to create and raise a pre-existing dispute by asserting the sub-standard services were rendered by the applicant and was raised only after application filed under section 9 - The corporate debtor has not placed on record any document which exhibits the plausible dispute between the parties. It can be thus inferred that there is no merit in the so-called dispute raised by the corporate debtor in reply to the application. On the contrary there is an admission by the corporate debtor to do the payment upon receiving the payment from TATA projects, Ahmedabad Metro vide reply to section 8 notice through its email dated 25-5-2019. This leaves no doubt that the default has occurred with respect to the payment of the operational debt of the applicant. Time limitation - HELD THAT:- The date of default occurred from 16-4-2018 and hence the debt is not time barred and the application is filed within the period of limitation. Jurisdiction - HELD THAT:- The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. The present application is complete and perusing the documents on records it goes beyond doubt that the Applicant is entitled to claim its dues, which is admitted by the Corporate Debtor vide its letter dated 25-5-2019, establishing the default in payment of the operational debt. The application is complete as per the requirements of section 9 of the code and in the light of above facts and records the present application is admitted - Application admitted - moratorium declared. Issues:- Application under section 9 of Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency process.- Dispute regarding outstanding payments and quality of supplied materials.- Settlement agreement between parties and non-compliance.- Jurisdiction of the Tribunal.- Appointment of Interim Resolution Professional.- Direction to Operational Creditor for depositing funds.Analysis:1. The Applicant, a private limited company, filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency process against the Corporate Debtor, an LLP. The Applicant claimed outstanding payments for supplied polymers amounting to Rs. 24,44,289, including interest, which the Corporate Debtor failed to pay despite multiple reminders and a demand notice.2. The Corporate Debtor contended that the supplied materials were sub-standard and overpriced, raising a dispute regarding the quality and pricing. They also mentioned a settlement agreement from 15-12-2018, where they were supposed to pay Rs. 9,65,000, but the balance was not settled within the agreed time frame.3. The Applicant denied the allegations of sub-standard supply and higher pricing, stating that no disputes were raised during the supply period. They argued that the settlement agreement lapsed due to non-compliance by the Corporate Debtor, as they failed to pay within the stipulated time.4. The Tribunal observed that the Corporate Debtor's attempt to create a pre-existing dispute was unfounded, as no evidence of such dispute was presented. The Corporate Debtor's admission of non-payment in their response to the demand notice further solidified the Applicant's claim of default in payment.5. Jurisdiction was established as the registered office of the Corporate Debtor was in Delhi, falling under the Tribunal's purview. Consequently, the Tribunal admitted the application, appointing an Interim Resolution Professional and directing the Operational Creditor to deposit funds to meet expenses related to the resolution process.6. The admission of the application triggered a moratorium period under Section 14(1) of the Code, prohibiting certain actions against the Corporate Debtor. The Tribunal ordered communication of the order to the parties involved, appointment of the IRP, and compliance with necessary formalities for the resolution process to proceed effectively.