Operational debt proved and no substantiated dispute led to admission of the insolvency petition and CIRP initiation.

The operational creditor established unpaid operational debt through invoices, demand notice, and a bank certificate showing the last payment, and the corporate debtor did not file a statutory reply disputing the claim. The tribunal held the application complete, within limitation, and not barred by any substantiated pre-existing dispute, as the allegation of inferior material and full payment was unsupported by documents. On satisfaction of the statutory conditions, the petition was admitted, CIRP was commenced, an interim resolution professional was appointed, and moratorium and consequential management directions were issued.

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Issues: (i) Whether the operational creditor established an operational debt, default, and compliance with the statutory requirements for admission of the application under the insolvency law. (ii) Whether the application was barred by limitation or defeated by a pre-existing dispute between the parties. (iii) Whether the conditions for admission of the petition and commencement of corporate insolvency resolution process, including appointment of an interim resolution professional and moratorium, were satisfied.

Issue (i): Whether the operational creditor established an operational debt, default, and compliance with the statutory requirements for admission of the application under the insolvency law.

Analysis: The application was supported by invoices, a demand notice, and a bank certificate showing the last payment received from the corporate debtor. The record showed non-payment of the unpaid operational debt, service of demand notice, and absence of any reply disputing the claim in the statutory manner. The application was also found complete in the prescribed form and supported by the affidavit required to indicate that no notice of dispute had been received.

Conclusion: The statutory requirements for admission were satisfied in favour of the operational creditor.

Issue (ii): Whether the application was barred by limitation or defeated by a pre-existing dispute between the parties.

Analysis: The first default was treated as having occurred on 14.09.2016 and the last payment was made on 17.08.2019, so the claim was held to be within limitation. The response alleging inferior material and full payment was unsupported by documentary material. In the absence of any substantiated dispute and in view of the unanswered demand notice, no pre-existing dispute was accepted.

Conclusion: The application was not barred by limitation and was not defeated by any pre-existing dispute.

Issue (iii): Whether the conditions for admission of the petition and commencement of corporate insolvency resolution process, including appointment of an interim resolution professional and moratorium, were satisfied.

Analysis: On satisfaction of the statutory conditions, the application was admitted and CIRP was directed to commence. Since no resolution professional had been proposed, the adjudicating authority selected and appointed an interim resolution professional from the approved panel. Consequential directions were issued for takeover of management, collation of claims, cooperation by the corporate debtor, and invocation of moratorium.

Conclusion: The petition was admitted, CIRP was commenced, an interim resolution professional was appointed, and moratorium was invoked.

Final Conclusion: The operational creditor obtained admission of its insolvency application, resulting in commencement of CIRP against the corporate debtor with all statutory consequential directions.

Ratio Decidendi: Where the operational debt, default, service of demand notice, and absence of a substantiated pre-existing dispute are established, and the application is otherwise complete and within limitation, the adjudicating authority must admit the section 9 application and initiate CIRP.

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