2021 (5) TMI 321 - Tri - Insolvency and Bankruptcy

Tribunal Admits Company Petition for Insolvency Process with Moratorium Orders

The Tribunal admitted the Company Petition, initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is an admitted liability and that the documents submitted by the operational creditor are enough to establish the debt upon the corporate debtor and hence the contentions made by the corporate debtor cannot be relied upon. Also, they defaulted in repaying the debt amount which is more than the threshold of ₹ 1,00,000/- to each individual operational creditor. Hence, all the requisite conditions for admission of a petition under Section 9 have been found to be fulfilled and therefore, this petition deserves to be admitted. Application admitted - moratorium declared - petition allowed. Issues:1. Initiation of Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor based on default in payment of dues.2. Dispute regarding whether the claim amount constitutes operational debt under the Insolvency and Bankruptcy Code.3. Admissibility of the petition under Section 9 of the Code based on the nature of the debt and default.Issue 1: Initiation of CIRPThe Company Petition was filed by Operational Creditors seeking to initiate CIRP against the Corporate Debtor due to default in payment of dues. The Operational Creditors alleged that a significant sum was due against arrears of license fees and liquidated damages as per the agreement. The Corporate Debtor issued cheques to clear the outstanding fees, but they were returned due to insufficient funds. The Operational Creditors terminated the agreement and served a Demand Notice under Section 8 of the Code, which was acknowledged but not responded to within the stipulated period.Issue 2: Nature of Claim as Operational DebtThe Corporate Debtor disputed that the claim amount did not constitute operational debt as per the provisions of the Code. They argued that the petition was for the recovery of arrears of license fees and damages under the agreement. However, the Tribunal referred to relevant definitions in the Code and previous judgments to establish that rent/license fees fall under operational debt. Citing judgments, the Tribunal concluded that the contentions of the Corporate Debtor were incorrect, and the debt was an admitted liability.Issue 3: Admissibility of the PetitionAfter considering submissions and relevant definitions, the Tribunal found that all requisite conditions for admission of the petition under Section 9 were fulfilled. The debt amount exceeded the threshold, and the documents submitted by the Operational Creditors established the debt upon the Corporate Debtor. The Tribunal also noted that an Interim Resolution Professional was proposed, and the necessary conditions for admission were met. Consequently, the petition was admitted, and CIRP was ordered against the Corporate Debtor.In conclusion, the Tribunal admitted the Company Petition, initiated CIRP against the Corporate Debtor, and appointed an Interim Resolution Professional. Various orders were issued to ensure the smooth resolution process, including a moratorium period, prohibition on certain actions against the Corporate Debtor, and management vesting in the IRP/RP during the CIRP period. The public announcement of the process was also mandated, and necessary communications were directed to relevant authorities and parties involved.