Court admits operational-creditor's CIRP application against corporate-debtor under Insolvency and Bankruptcy Code

The court admitted the operational-creditor's application to initiate Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code against the corporate-debtor. The corporate-debtor failed to respond to the demand notice or make the payment, leading to the court finding the application complete and eligible for admission. A moratorium was imposed, an Interim Resolution Professional (IRP) was appointed, and the operational-creditor was directed to deposit a fee for the IRP's expenses.

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Issues Involved:
Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code based on non-payment by the corporate debtor despite demand notice.

Analysis:
The operational-creditor filed an application under Section 9 of the Insolvency and Bankruptcy Code seeking to initiate the CIRP against the corporate-debtor due to unpaid dues. The operational-creditor, engaged in manufacturing structural metal products, had received orders from the corporate-debtor for supply of goods. Despite delivering the ordered goods and sending a demand notice with invoices, the corporate-debtor neither made the payment nor raised any dispute. The respondent's counsel withdrew representation, and despite multiple opportunities given, no response was received from the respondent.

The applicant, through its counsel, submitted that the demand notice was duly delivered, and no reply was received from the corporate-debtor. The application included details of the outstanding dues, the delivery of the demand notice, and the absence of any response from the respondent. The applicant also proposed the name of the Interim Resolution Professional (IRP) in the application.

Upon examining the provisions of Sections 8 and 9 of the Insolvency and Bankruptcy Code, it was noted that the corporate-debtor must raise any dispute within ten days of receiving the demand notice or provide documents showing payment of the debt. As the corporate-debtor failed to respond or show payment, the operational-creditor was deemed eligible to file the application under Section 9. The Bench found the application complete, with no payment made, no dispute raised, and the proposed IRP having no pending disciplinary proceedings, leading to the admission of the application to initiate CIRP.

A moratorium was imposed as per Section 14 of the Code, preventing legal actions against the corporate debtor and asset transfers. The IRP proposed by the applicant was confirmed, and directed to take necessary steps under the Code. The operational-creditor was instructed to deposit a fee for the IRP's expenses, to be reimbursed later. The registry was directed to communicate the order to all relevant parties involved.

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