Initiation of Corporate Insolvency Process: Moratorium declared, IRP appointed, Creditor Committee constituted

The Tribunal admitted the petition for initiating Corporate Insolvency Resolution Process (CIRP) against the corporate debtor, declared a moratorium in accordance with Section 14 of the Insolvency and Bankruptcy Code, and appointed an Interim Resolution Professional (IRP) to manage the debtor's affairs and constitute a Committee of Creditors. The conditions under Section 9 of the Code were found to be satisfied, and the operational debt was undisputed, leading to the initiation of insolvency proceedings against the corporate debtor.

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Issues Involved:

1. Proper service of demand notice.
2. Dispute of operational debt by the corporate debtor.
3. Satisfaction of conditions under Section 9 of the Insolvency and Bankruptcy Code, 2016.
4. Admission of the petition for initiation of Corporate Insolvency Resolution Process (CIRP).
5. Declaration of moratorium.
6. Appointment of Interim Resolution Professional (IRP).

Issue-wise Detailed Analysis:

1. Proper Service of Demand Notice:
The Tribunal examined whether the demand notice in Form No.3 dated 08.03.2019 was properly served. The notice was sent to the registered address of the corporate debtor as per the master data provided in the petition. The operational creditor submitted postal receipts and tracking reports as evidence of service. The corporate debtor did not respond to the notice, indicating proper service.

2. Dispute of Operational Debt by the Corporate Debtor:
The Tribunal considered whether the operational debt was disputed by the corporate debtor. The corporate debtor neither filed a reply to the petition nor disputed the liability towards the operational creditor. Consequently, there was no dispute regarding the liability, and the corporate debtor was proceeded against ex parte.

3. Satisfaction of Conditions under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal reviewed the provisions of Section 9(5)(i) of the Code, which require the application to be complete, unpaid operational debt to exist, delivery of invoice or notice for payment, no notice of dispute, and no disciplinary proceedings against the proposed resolution professional. The Tribunal confirmed that these conditions were satisfied, as the operational creditor's application was complete, the unpaid debt was Rs. 19,00,000, and there was no pre-existing dispute or disciplinary proceedings.

4. Admission of the Petition for Initiation of CIRP:
The Tribunal found the application in Form No.5 to be complete and the operational debt undisputed. The debt amount was more than the statutory threshold of Rs. 1 lakh. Consequently, the Tribunal admitted the petition for initiating the CIRP against the corporate debtor.

5. Declaration of Moratorium:
The Tribunal declared a moratorium in accordance with Section 14 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) Suspension of actions to foreclose or enforce security interests.
d) Prohibition on recovery of property by owners or lessors.

The moratorium would remain effective until the completion of the CIRP or approval of a resolution plan or order for liquidation.

6. Appointment of Interim Resolution Professional (IRP):
The operational creditor did not propose a resolution professional, so the Tribunal referred to the Insolvency and Bankruptcy Board of India (IBBI) for a recommendation. The Tribunal appointed Mr. Anjum Goyal as the IRP, directing him to take control of the corporate debtor's assets, make a public announcement, manage the corporate debtor's affairs, and constitute a Committee of Creditors. The IRP was also instructed to submit regular progress reports to the Tribunal.

Conclusion:
The Tribunal admitted the petition for initiating CIRP against the corporate debtor, declared a moratorium, and appointed an IRP, ensuring compliance with the Insolvency and Bankruptcy Code, 2016.

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