2020 (7) TMI 206 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Process Initiated, Moratorium Declared, Interim Resolution Professional Appointed

Cerem Tec Innovative Ceramic Versus Mariya Healthcare (P.) Ltd.

The Tribunal admitted the petition under Section 9 of the Insolvency and Bankruptcy Code, initiating the Corporate Insolvency Resolution Process against ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is evident that the Corporate Debtor has admitted and acknowledged the debt, by way of its e-mails annexed as A4 and A8, wherein the Corporate Debtor has confirmed the Balance outstanding due towards the Applicant - the Corporate Debtor has failed to reply to the Demand Notice issued under section 8 of the I&B Code and has not raised any dispute before the filing of Reply to the present Application. It is also evident from the letter dated 29-4-2018 that the Corporate Debtor have agreed to pay the outstanding amount along with interest and late payment fee and agreed to pay the court fee if any default occurred in payment of the said outstanding amount - the contentions raised by the counsel for the Corporate Debtor are frivolous and not tenable and hence rejected. The Application is complete and has been filed under the proper form - Applicant, having supplied goods to the Corporate Debtor for which the Corporate Debtor has failed to make payments, is an Operational Creditor as per the provisions of the I & B Code, 2016. The Corporate Debtor has not raised any dispute in respect of the goods and the amount to be paid to the Applicant until its reply to Application. The application made by the Operational Creditor is complete in all respects as required under section 9 Sub-Section 5, Sub clause (i) of I & B Code, 2016. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition - Petition admitted - moratorium declared. Issues Involved:1. Initiation of Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016.2. Existence of debt and default by the Corporate Debtor.3. Alleged pre-existing dispute regarding the quality of goods supplied.4. Appointment of an Interim Resolution Professional (IRP).Issue-wise Detailed Analysis:1. Initiation of Insolvency Resolution Process:The application was filed by Ceram Tec Innovative Ceramic Engineering (M) SDN. BHD under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Insolvency Resolution Process against Mariya Healthcare Private Limited. The Operational Creditor claimed an outstanding amount of USD 20,544 as of 1-11-2018, arising from a trade transaction.2. Existence of Debt and Default:The Operational Creditor supplied goods as per the Proforma Invoice/Purchase Order and raised Invoice No. 90012278 dated 14-12-2015. The Corporate Debtor paid 50% of the invoice value as a condition precedent for production, with the remaining 50% due upon delivery. Despite repeated assurances and acknowledgments of the debt via emails and legal notices, the Corporate Debtor failed to pay the balance amount. The Corporate Debtor acknowledged the debt and default in a letter dated 29-4-2018, agreeing to pay the outstanding amount along with late fees and court charges if defaulted.3. Alleged Pre-existing Dispute:The Corporate Debtor argued that there was a pre-existing dispute regarding the quality of goods supplied, claiming the goods did not meet the specifications and were held by customs for a year. They alleged the product supplied was defective and did not meet the ASTMD 3577 standards, causing business losses. However, the Tribunal found no documentary evidence of any dispute regarding product specifications before the filing of the Reply to the present Application. The Operational Creditor countered that the products met the required specifications and that any claims of defects were an afterthought by the Corporate Debtor.4. Appointment of an Interim Resolution Professional (IRP):The Tribunal allowed the Miscellaneous Application No. 14/KOB/2020, accepting the new authorized representative of the Operational Creditor. The Tribunal appointed Ms. Baiju P. as the Interim Resolution Professional (IRP) to carry out the functions as mentioned under the IBC. The IRP is directed to manage the Corporate Debtor's affairs during the CIRP period and ensure compliance with the relevant regulations.Findings and Order:The Tribunal concluded that the Corporate Debtor admitted and acknowledged the debt and default through various communications. The application was complete, and there was no evidence of a pre-existing dispute regarding the product specifications. The Tribunal admitted the petition under Section 9 of the IBC, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. A moratorium was declared under Section 14 of the IBC, prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor during the CIRP period. The Tribunal ordered the public announcement of the CIRP and directed the Operational Creditor to deposit Rs. 2,00,000 with the IRP for expenses.Order:(a) The petition under Section 9 of the IBC is admitted.(b) A moratorium under Section 14 of the IBC is declared.(c) The IRP, Ms. Baiju P., is appointed to manage the CIRP.(d) The Operational Creditor is directed to deposit Rs. 2,00,000 with the IRP.(e) The Registry is instructed to communicate the order to relevant parties and authorities.