2020 (12) TMI 706 - Tri - Insolvency and Bankruptcy

Tribunal Grants Insolvency Application, Imposes Moratorium: Compliance & Procedural Adherence Essential

The Tribunal granted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by M/S INDSAO INFRATECH against M/s. Mars ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - existence of debt and dispute or not - HELD THAT:- The Applicant on 23.10.2019 sent a Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 read with Rule 5 of the Insolvency and Bankruptcy (Applications to Adjudicating Authority) Rules, 2016 for the unpaid operational debt to the Corporate Debtor and no reply has been sent by the Corporate Debtor. The provision of Section 9(3)(b) of the code has also been complied with. The Applicant has therefore filed this petition as an Operational Creditor praying for initiation of Corporate Insolvency Resolution Process of the Corporate Debtor for its inability to liquidate their claim of ₹ 2,02,05,776/- including interest charged at 18% - Notice was issued however, the Corporate Debtor did not appear before the Adjudicating Authority and the order was reserved on 13.11.2020. It is observed that the Applicant has clearly established the existence of debt. In the above circumstances this Tribunal initiates CIRP of the Respondent company. Application admitted - moratorium declared. Issues:1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency process.2. Claim of operational debt against the Corporate Debtor.3. Dishonor of post-dated cheques issued for settlement agreements.4. Sending of Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016.5. Non-appearance of Corporate Debtor before the Adjudicating Authority.6. Establishment of debt by the Applicant.7. Imposition of moratorium under Section 14 of the Code.8. Appointment of interim resolution professional and deposit requirement by the Applicant.Analysis:1. The judgment pertains to an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by M/S INDSAO INFRATECH seeking to initiate the Corporate Insolvency process against M/s. Mars Buildmart Private Limited, the Corporate Debtor. The Applicant claimed to be an operational creditor engaged in building completion activities and had executed agreements with the Corporate Debtor for plumbing and electrical work at a construction project in Gurgaon.2. The Applicant alleged that despite completing the work as per specifications and issuing settlement agreements, the Corporate Debtor failed to honor post-dated cheques amounting to a total of Rs. 2,02,05,776. Following the dishonor of the cheques, the Applicant sent a Demand Notice under Section 8 of the Insolvency and Bankruptcy Code, 2016, to the Corporate Debtor, which remained unanswered.3. Upon the non-appearance of the Corporate Debtor before the Adjudicating Authority, the Tribunal observed that the Applicant had established the existence of the debt. Consequently, the Tribunal initiated the Corporate Insolvency Resolution Process (CIRP) of the Respondent company and imposed a moratorium under Section 14 of the Code, prohibiting various actions against the Corporate Debtor's assets.4. Additionally, the Tribunal appointed an interim resolution professional, Mr. Umesh Gupta, to oversee the resolution process. The Applicant was directed to deposit a sum of Rs. 2 lakhs to cover immediate expenses, which would be reimbursed as part of the costs of the CIRP. The order was communicated to the Applicant, Corporate Debtor, and relevant authorities for compliance and record-keeping purposes, ensuring transparency and procedural adherence in the insolvency resolution process.