National Company Law Tribunal initiates CIRP against Harsha Exito Engineering Pvt. Ltd.
The National Company Law Tribunal, Chennai Bench, admitted the application for Corporate Insolvency Resolution Process (CIRP) against M/s. Harsha Exito Engineering Pvt. Ltd. due to default in payment. The Tribunal appointed an Interim Resolution Professional, invoked a moratorium period under Section 14(1) of the Insolvency and Bankruptcy Code, 2016, and directed the Operational Creditor to pay expenses. The CIRP initiation was based on the debt, default, and non-compliance with settlement terms by the Corporate Debtor, leading to immediate effect of the moratorium.
Issues: Application for Corporate Insolvency Resolution Process (CIRP) against M/s. Harsha Exito Engineering Pvt. Ltd. for default in payment.
In this judgment by the National Company Law Tribunal, Chennai Bench, the Applicant sought to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Harsha Exito Engineering Pvt. Ltd., under the Insolvency and Bankruptcy Code, 2016, due to default in payment. The Applicant, an "Operational Creditor," claimed a debt of Rs. 40,79,655. A Joint Memorandum of Settlement was previously filed, wherein the Corporate Debtor agreed to pay Rs. 82,10,587 in four instalments. However, only the first instalment of Rs. 25,00,000 was paid in full, with a partial payment of Rs. 18,00,000 made towards the second instalment, leaving Rs. 1,03,000 due. The third and fourth instalments remained unpaid, leading to the current Application for CIRP initiation.
In a previous petition, a Joint Memorandum of Settlement was filed, granting the Operational Creditor the liberty to file a fresh petition if the settlement terms were not met by the Corporate Debtor. As the Corporate Debtor failed to fulfill the settlement terms, the current petition was filed. Despite the absence of the Corporate Debtor during the proceedings, the Tribunal noted the existence of debt, default in payment, and the settlement agreement from the previous petition, leading to the initiation of CIRP against the Corporate Debtor.
The Tribunal appointed an Interim Resolution Professional based on the latest list provided by the Insolvency and Bankruptcy Board of India. The moratorium period was invoked under Section 14(1) of the Code, prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor. Essential goods or services supply to the Corporate Debtor could not be terminated during the moratorium. The moratorium period would last until the completion of the Corporate Insolvency Resolution Process, with exceptions as specified in the Code.
The Operational Creditor was directed to pay Rs. 2,00,000 to the Interim Resolution Professional to cover expenses. The Application was admitted under Section 9(5) of the IBC, 2016, and the moratorium took effect immediately. The Order was to be communicated to the parties, the IBBI, and the Registrar of Companies, with the initiation of CIRP notified to the concerned authorities.
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