Tribunal Admits Company Application for Corporate Insolvency Resolution Process

The Tribunal admitted the Company Application for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, appointing an Insolvency Resolution Professional (IRP) and implementing necessary measures to manage the insolvency proceedings effectively. The Corporate Debtor's defense was rejected, and a moratorium on legal actions was declared, with protection for essential goods or services supply. The Directors and Promoters were directed to cooperate with the IRP, and the Registry was tasked with communicating the order to relevant parties and updating the Corporate Debtor's status with the Ministry of Corporate Affairs.

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Issues:
Initiation of Corporate Insolvency Resolution Process under section 9 of IBC, 2016 based on default in payment of Operational Debt.

Analysis:
The application was filed by an Operational Creditor against a Corporate Debtor for defaulting on an operational debt of USD 212,936.07. The debt was related to repair and maintenance services provided by the Operational Creditor to the Corporate Debtor, including the supply of aircraft parts. The Operational Creditor claimed that despite sending a notice under section 8 of IBC, the Corporate Debtor failed to clear the debt or raise any pre-existing dispute. The Corporate Debtor disputed the receipt of the demand notice and claimed that the Operational Creditor owed them USD 80,130.

The Tribunal examined the evidence and found that the demand notice was indeed served to the Corporate Debtor, as evidenced by the postal track report. The Corporate Debtor's defense of set off or counter-claim was deemed invalid under IBC, and their failure to respond to the notice within 10 days was considered fatal to their defense. The Tribunal rejected the Corporate Debtor's defense as an afterthought and upheld the Operational Creditor's claim of an operational debt exceeding INR 1,00,000.

The Tribunal appointed an Insolvency Resolution Professional (IRP) and declared a moratorium on legal actions against the Corporate Debtor. Essential goods or services supply to the Corporate Debtor was protected during the moratorium period. The IRP was instructed to comply with specific sections of the IBC, and the Directors and Promoters of the Corporate Debtor were directed to cooperate with the IRP. The Registry was tasked with communicating the order to all relevant parties and updating the Corporate Debtor's status with the Ministry of Corporate Affairs.

In conclusion, the Tribunal admitted the Company Application for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, appointing Mr. Santosh Bhatia as the IRP and implementing necessary measures to manage the insolvency proceedings effectively.

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