Tribunal initiates Corporate Insolvency Resolution Process due to payment default

The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, finding the default in payment by the Corporate Debtor established. Consequently, the Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor, with an Interim Resolution Professional appointed and a moratorium imposed under Section 14 of the Code. The order was directed to be communicated to relevant parties, including the Operational Creditor, Corporate Debtor, IRP, and Registrar of Companies within seven days.

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Issues Involved:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Default in payment by the Corporate Debtor.
3. Pre-existing disputes raised by the Corporate Debtor.
4. Admission of operational debt by the Corporate Debtor.
5. Appointment of Interim Resolution Professional (IRP).
6. Moratorium under Section 14 of the Code.
7. Communication of the order to relevant parties.

Issue-wise Detailed Analysis:

1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The application was filed by the Operational Creditor, M/s. C&S Electric Ltd., under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016), read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Unilec Engineers Limited.

2. Default in payment by the Corporate Debtor:
The Operational Creditor supplied electrical equipment to the Corporate Debtor between August 2016 and September 2017. The Corporate Debtor failed to make payments within the agreed period of 120 days from receipt of the materials. Post-dated cheques issued by the Corporate Debtor were dishonored due to insufficient funds. Despite several reminders and a demand notice dated 22.06.2018, the Corporate Debtor did not settle the outstanding dues amounting to Rs. 2,01,63,267.13.

3. Pre-existing disputes raised by the Corporate Debtor:
The Corporate Debtor contended that the Operational Creditor delayed deliveries and supplied defective components for a project with BHEL, leading to penalties and liquidated damages. The Corporate Debtor claimed these issues predated the current transactions and were communicated through various emails and letters.

4. Admission of operational debt by the Corporate Debtor:
The Operational Creditor argued that the disputes raised by the Corporate Debtor were related to transactions before August 2016 and were not relevant to the current outstanding debt. The Corporate Debtor had admitted to the debt in an email dated 18.07.2018, assuring payment and requesting a meeting for repayment scheduling.

5. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Mansij Arya as the Interim Resolution Professional (IRP) since the Applicant had not proposed any name. The IRP was directed to take necessary steps under Sections 15, 17, 18, 20, and 21 of the Code.

6. Moratorium under Section 14 of the Code:
Upon admitting the application, a moratorium as per Section 14(1) of the Code was imposed, prohibiting actions against the Corporate Debtor. The provisions of Section 14(2) to 14(3) would apply during the moratorium period.

7. Communication of the order to relevant parties:
The Registry was instructed to communicate the order to the Operational Creditor, Corporate Debtor, IRP, and the Registrar of Companies, NCR, New Delhi, within seven days. The Registrar of Companies was directed to update the status of the Corporate Debtor on their website.

Conclusion:
The Tribunal found the application complete and established the default in payment of the operational debt beyond doubt. Hence, the application was admitted, and the CIRP against the Corporate Debtor was initiated.

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