Tribunal Grants Insolvency Application, Declares Moratorium

The Tribunal granted the application under Section 9 of The Insolvency and Bankruptcy Code, 2016, finding the debt undisputed and the respondent in default of payment. The respondent's arguments were deemed illusory, and failure to dispute the notice under Section 8 of the Code was noted. Citing relevant documents and a Supreme Court judgment, the Tribunal declared a moratorium under Section 13, initiating the Corporate Insolvency Resolution Process. An Interim Resolution Professional was appointed, and the moratorium imposed to facilitate resolution, with instructions to continue supplies to the debtor.

---

---

Issues:
Application under Section 9 of The Insolvency and Bankruptcy Code, 2016 for operational debt.

Analysis:
The application was filed by a director of a company under Section 9 of The Insolvency and Bankruptcy Code, 2016, as an operational creditor. The respondent, a corporate debtor, had placed purchase orders for rolling mill machinery and equipment from the applicant. The applicant supplied the goods but was not paid the outstanding amount of Rs. 18,52,600. The respondent admitted the debt but failed to make the payment despite reminders and a demand notice. The applicant submitted relevant documents to support the claim, including invoices, demand notice, and communication records.

The respondent argued that it was not insolvent, facing only temporary financial difficulties, and had made offers to repay the debt, which were rejected by the applicant. The respondent denied receiving the goods and claimed there was no proof of delivery. However, the respondent's letter admitting the debt and requesting more time to settle the amount contradicted these claims. The respondent's arguments were deemed illusory, and the respondent failed to dispute the notice under Section 8 of the I & B Code.

The Tribunal found that the application was within the limitation period, the debt was not denied, and there was no pre-existing dispute. The documents provided by the applicant established the debt and default by the respondent in payment. The respondent never raised any dispute before the notice was issued. The Tribunal referred to a Supreme Court judgment to determine the existence of operational debt, due payment, and absence of disputes, concluding that the applicant met the requirements of the I & B Code.

The Tribunal ordered a moratorium under Section 13 of the Code, declaring the initiation of the Corporate Insolvency Resolution Process. An Interim Resolution Professional was appointed, and the moratorium was imposed to prohibit legal actions against the corporate debtor. Supply of goods and services to the debtor was to continue during the moratorium. The order would remain in effect until the completion of the resolution process or liquidation. The Registry was instructed to inform relevant parties about the order and prevent any actions that could hinder the resolution process.

---