National Company Law Tribunal Admits Insolvency Application Against Corporate Debtor for Defaulting Payment

The National Company Law Tribunal, Chennai Bench, admitted an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by an Operational Creditor against a Corporate Debtor for defaulting on a payment of Rs. 9,55,510. The Tribunal found jurisdiction to adjudicate the petition, admitted the application, appointed an Interim Resolution Professional, initiated the Corporate Insolvency Resolution Process, imposed a moratorium, and directed the Operational Creditor to pay Rs. 50,000 to the Interim Resolution Professional for expenses. The application was allowed, and the moratorium took immediate effect.

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Issues: Application under Section 9 of I & B Code, default in payment, jurisdiction of Adjudicating Authority, admission of application, appointment of Interim Resolution Professional, initiation of Corporate Insolvency Resolution Process, moratorium period, payment to Interim Resolution Professional.

In the judgment delivered by the National Company Law Tribunal, Chennai Bench, the issues revolved around an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor against a Corporate Debtor for defaulting on a payment of Rs. 9,55,510 for the purchase of materials. The Operational Creditor provided evidence of the debt and default, including invoices, delivery challan-cum-weighment slip, and a demand notice. The Adjudicating Authority found that it had jurisdiction to adjudicate the petition, considering the debt amount and the location of the Corporate Debtor's office. The application was filed within the period of limitation, and the Adjudicating Authority decided to admit the application as filed by the Operational Creditor.

During the proceedings, it was noted that the Corporate Debtor had made part payments but failed to honor the last payment, leading to the initiation of the Corporate Insolvency Resolution Process. The Tribunal appointed an Interim Resolution Professional based on the list provided by the Insolvency and Bankruptcy Board of India. The Tribunal imposed a moratorium on the Corporate Debtor, restricting certain actions like institution of suits, transferring assets, or enforcing security interests. Essential supplies to the Corporate Debtor were to continue during the moratorium, and the duration of the moratorium was specified until the completion of the Corporate Insolvency Resolution Process.

The Operational Creditor was directed to pay a sum of Rs. 50,000 to the Interim Resolution Professional for necessary expenses. The Tribunal admitted the application under Section 9(5) of the IBC, 2016, and the moratorium took effect immediately. The Registry was instructed to communicate the order to the parties involved and forward a copy to the IBBI for records. The Interim Resolution Professional was to receive a copy of the order promptly. Ultimately, the application IB A/1324/2019 was allowed, concluding the judgment.

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