Court Admits Insolvency Petition Against Debtor, Initiates Resolution Process

The Bench admitted the petition filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor for unpaid debt. Despite the Corporate Debtor's contentions, the Bench found the Operational Creditor had met the legal requirements for demonstrating default. Consequently, the Corporate Insolvency Resolution Process (CIRP) was initiated, invoking the moratorium under Section 14 of the Code. Prohibitions were imposed under the moratorium, an Interim Resolution Professional (IRP) was appointed, and the Operational Creditor was directed to deposit funds for immediate expenses.

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Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of IBC, 2016 against the Corporate Debtor M/s. Sanyog Healthcare Limited.

Analysis:
The Petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by M/s Rhydburg Pharmaceuticals Ltd., the Operational Creditor, seeking to initiate the Corporate Insolvency Resolution Process against M/s. Sanyog Healthcare Limited, the Corporate Debtor. The Operational Creditor claimed an unpaid debt of &8377; 3,49,65,711/- as of 21.03.2020, supported by invoices and ledger accounts. The Operational Creditor had issued a Demand Notice under Section 8 of IBC, 2016 on 10.03.2020, which was served to the Corporate Debtor, leading to a partial payment of &8377; 3,50,000/-, leaving a substantial amount unpaid.

The Corporate Debtor contended that it had made a payment of &8377; 1 Crore post the notice dated 29.01.2020, but the Operational Creditor proceeded with the petition hastily. Additionally, the Corporate Debtor raised a defense under Section 10A of IBC, 2016, claiming the petition was barred as it was filed after 25.03.2020. However, the Bench noted that the last invoice was issued before 25.03.2020, allowing the petition to proceed for defaults occurring prior to the mentioned date.

Upon review of submissions from both parties, the Bench found that the Corporate Debtor failed to dispute the debt or make full payment as required under Section 8(2) of IBC, 2016. Consequently, the Bench concluded that the Operational Creditor successfully demonstrated the default by the Corporate Debtor, meeting the legal requirements under Section 9(5) of the IBC. Therefore, the petition was admitted, and the Corporate Insolvency Resolution Process (CIRP) was initiated, invoking the moratorium under Section 14 of the Code.

The Bench imposed prohibitions under the moratorium, directing the appointment of an Interim Resolution Professional (IRP) and requiring the Operational Creditor to deposit funds for immediate expenses. The IRP was instructed to comply with specific sections of the IBC, and all parties were notified of the order. Additionally, the Registry was tasked with informing the Insolvency and Bankruptcy Board of India (IBBI) for record-keeping purposes.

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