Court grants CIRP against Italtinto Equipment Pvt Ltd, appoints Interim Resolution Professional

The petition to initiate Corporate Insolvency Resolution Process (CIRP) against the Respondent, Italtinto Equipment Private Limited, was allowed by the Tribunal. The Petitioner, Clariant Services India Private Limited, was deemed an Operational Creditor under the Insolvency and Bankruptcy Code. The Tribunal confirmed the existence of debt and default, rejecting the Respondent's challenges on maintainability. Mr. Bhaskar Gopal Shetty was appointed as the Interim Resolution Professional, and a moratorium was imposed. The CIRP was initiated, and essential services to the Corporate Debtor were to continue during the moratorium period.

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Issues Involved:

1. Default in payment by the Respondent under the Business Transfer Agreement.
2. Whether the Petitioner qualifies as an Operational Creditor under the Insolvency and Bankruptcy Code.
3. Existence of debt and default.
4. Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code.
5. Appointment of Interim Resolution Professional and initiation of Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis:

1. Default in Payment by the Respondent:
The Petitioner, Clariant Services India Private Limited, filed a petition to initiate CIRP against the Respondent, Italtinto Equipment Private Limited, alleging default in payment under a Business Transfer Agreement dated 04.11.2016. The agreement stipulated that the Respondent would pay INR 83,85,941 as consideration and discharge payments to suppliers and employees. The Respondent failed to pay INR 53,96,672, which included INR 36,66,696 towards supplier payments and INR 17,29,976 towards employee retiral liabilities.

2. Whether the Petitioner Qualifies as an Operational Creditor:
The Respondent argued that the Petitioner does not qualify as an Operational Creditor under Section 5(20) of the Insolvency and Bankruptcy Code, as the Petitioner did not supply goods or services directly to the Respondent. However, the Tribunal found that the Petitioner's claims pertain to the supply of goods and services by third parties and employees' dues, thus falling within the definition of "Operational Debt" under Section 5(21) of the Code. The debt was legally transferred to the Petitioner, making them an Operational Creditor.

3. Existence of Debt and Default:
The Tribunal confirmed the existence of debt and default, noting that the Respondent admitted its liability in a letter dated 17.03.2017. The Petitioner provided sufficient documentation, including the Business Transfer Agreement and various correspondences, to establish the debt. The Tribunal found no merit in the Respondent's defenses, which were deemed an afterthought to avoid liability.

4. Maintainability of the Petition under Section 9:
The Respondent challenged the maintainability of the petition, claiming that the Petitioner was not an Operational Creditor and that the debt did not qualify as Operational Debt. The Tribunal rejected these arguments, confirming that the petition met all requisite conditions under Section 9, including the minimum debt amount and the filing of the consent of the proposed Interim Resolution Professional.

5. Appointment of Interim Resolution Professional and Initiation of CIRP:
The Tribunal ordered the initiation of CIRP against the Respondent and appointed Mr. Bhaskar Gopal Shetty as the Interim Resolution Professional. The Petitioner was directed to deposit INR 1 lakh towards the initial CIRP cost. The Tribunal also imposed a moratorium, prohibiting suits, transferring assets, and other actions against the Corporate Debtor during the CIRP period.

Order:

(a) The petition is allowed, and CIRP is initiated against Italtinto Equipment Private Limited.
(b) Mr. Bhaskar Gopal Shetty is appointed as the Interim Resolution Professional.
(c) The Petitioner shall deposit INR 1 lakh towards the initial CIRP cost.
(d) A moratorium is imposed as per Section 14 of the Insolvency and Bankruptcy Code.
(e) The supply of essential goods or services to the Corporate Debtor shall not be terminated during the moratorium.
(f) The order of moratorium shall remain effective until the completion of the CIRP or further orders.
(g) Public announcement of the CIRP shall be made immediately.
(h) The management of the Corporate Debtor will vest in the IRP/RP during the CIRP period.
(i) The Registry shall communicate this order to the Registrar of Companies, Mumbai, for updating the Corporate Debtor's Master Data.

The petition is allowed, and the Registry is directed to communicate the order to both parties and the IRP immediately.

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