Tribunal Admits Petition for Corporate Insolvency Resolution Process, Appoints Interim Resolution Professional

The Tribunal admitted the petition for initiating Corporate Insolvency Resolution Process (CIRP) against the corporate debtor due to non-payment of operational debt, proper service of demand notice, absence of dispute, and compliance with Section 9 of the Insolvency and Bankruptcy Code. A moratorium was declared, suspending legal proceedings and asset transfers. Mr. Rajiv Bhambri was appointed as Interim Resolution Professional (IRP) with specific directions outlined, including managing the company's affairs and initiating the CIRP process.

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Issues Involved:
1. Proper service of demand notice.
2. Dispute of operational debt.
3. Compliance with Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016.
4. Admission of petition and initiation of Corporate Insolvency Resolution Process (CIRP).
5. Declaration of moratorium.
6. Appointment and directions to Interim Resolution Professional (IRP).

Detailed Analysis:

1. Proper Service of Demand Notice:
The Tribunal examined whether the demand notice in Form No. 3 dated 11-9-2018 was properly served. It was confirmed that the notice was sent to the registered office address of the corporate debtor as per the master data and the postal receipt was provided. No reply was received from the corporate debtor, indicating proper service of the notice.

2. Dispute of Operational Debt:
The Tribunal considered whether the operational debt was disputed by the corporate debtor. Since there was no representation or reply from the corporate debtor, it was concluded that there was no dispute regarding the liability. The operational creditor’s affidavit confirmed that no dispute was pending between the parties in any court of law.

3. Compliance with Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016:
The Tribunal referred to Section 9(5)(i) of the Code, which outlines the conditions for admitting an application for CIRP. The application was found to be complete, with no payment of the unpaid operational debt, and no notice of dispute received by the operational creditor. The proposed IRP had no disciplinary proceedings pending against him. The Tribunal cited the Supreme Court’s ruling in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, emphasizing that the adjudicating authority must reject the application if a genuine dispute exists. However, in this case, no such dispute was present.

4. Admission of Petition and Initiation of CIRP:
The Tribunal reviewed the application filed in Form No. 5 and found it complete. The operational debt in default amounted to Rs. 33,86,063/-, plus admitted interest at 18% per annum and Rs. 4,23,794/- towards Central Sales Tax. The demand notice was properly delivered, and no pre-existing dispute was proved. The Tribunal concluded that the corporate debtor failed to make the payment, satisfying the conditions under Section 9 of the Code. Consequently, the petition for initiating CIRP against the corporate debtor was admitted.

5. Declaration of Moratorium:
The Tribunal declared a moratorium in terms of Section 14(1) of the Code, which included:
(a) Suspension of suits or proceedings against the corporate debtor.
(b) Prohibition on transferring or disposing of the corporate debtor’s assets.
(c) Prevention of actions to enforce security interests.
(d) Recovery of property occupied by the corporate debtor.

The moratorium would remain effective until the completion of the CIRP or until the Tribunal approves a resolution plan or orders liquidation.

6. Appointment and Directions to Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Rajiv Bhambri as the Interim Resolution Professional (IRP) with specific directions:
(i) The term of appointment in accordance with Section 16(5) of the Code.
(ii) Suspension of the Board of Directors’ powers and vesting management with the IRP.
(iii) The IRP to act in accordance with the Code and professional standards.
(iv) Public announcement of the CIRP initiation within three days.
(v) Cooperation from the corporate debtor’s management and personnel.
(vi) Constitution of a Committee of Creditors and filing a report within thirty days.
(vii) Regular progress reports to be sent to the Tribunal every fortnight.

The Tribunal directed that a copy of the order be communicated to both parties and the IRP. The petitioner’s counsel was instructed to deliver the order to the IRP, and the Registry was to send a copy to the IRP via email.

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