Corporate Insolvency Resolution Process initiated under Section 9 of I&B Code for default in operational debt. The court admitted the application under Section 9 of the I&B Code, initiating the Corporate Insolvency Resolution Process against the Corporate ...
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Corporate Insolvency Resolution Process initiated under Section 9 of I&B Code for default in operational debt.
The court admitted the application under Section 9 of the I&B Code, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor due to default in payment of operational debt. The Operational Creditor successfully proved the debt and default, leading to the appointment of an Interim Resolution Professional and imposition of a moratorium under Section 14 of the Code. Essential supplies to the Corporate Debtor were to continue during the moratorium, with specified payment obligations for the Operational Creditor.
Issues: Application under Section 9 of I&B Code for initiation of CIRP based on default in payment of operational debt.
Analysis: The application was filed by the Operational Creditor against the Corporate Debtor for defaulting on an operational debt of Rs. 25,34,352. The Operational Creditor provided evidence of the debt through invoices and legal notices, which were acknowledged by the Corporate Debtor. The Corporate Debtor, in response, claimed that the material prices were high, leading to a negotiation for payment in instalments. However, the cheques issued for this purpose bounced, leading to a complaint under the Negotiable Instruments Act. Despite making partial payments, the Corporate Debtor disputed the total claim amount.
The Adjudicating Authority found that the Operational Creditor had proven the existence of debt and default, establishing jurisdiction to adjudicate the petition. The debt was within the period of limitation, and the Adjudicating Authority decided to admit the application. An Interim Resolution Professional was appointed, and the moratorium under Section 14 of the Code was imposed on the Corporate Debtor, preventing certain actions against its assets.
During the moratorium period, essential supplies to the Corporate Debtor were to continue, and the duration of the moratorium was specified. The Operational Creditor was directed to pay a sum to the Interim Resolution Professional for expenses. The application was admitted, and the moratorium came into effect immediately. The Order was communicated to all relevant parties and the Interim Resolution Professional for further action.
Therefore, the judgment allowed the application under Section 9 of the I&B Code, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor based on the default in payment of operational debt.
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