Adjudicating Authority admits petition under Insolvency and Bankruptcy Code, initiating Corporate Insolvency Resolution Process

The petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 was admitted by the Adjudicating Authority. The operational creditor's claim of outstanding debt against the corporate debtor was found to be due and payable without any preexisting dispute. The Authority invoked a moratorium under Section 13, initiating the Corporate Insolvency Resolution Process to protect stakeholders' interests. An interim resolution professional was appointed, and the order aimed to prevent the striking off of the respondent company's name during the insolvency resolution process.

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Issues:
Admission of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on default and debt due and payable.

Analysis:
The case involved a petition filed by an operational creditor against a corporate debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016. The operational creditor supplied goods to the corporate debtor on credit, resulting in an outstanding amount of Rs. 3,18,27,826 as of 01.04.2019. The operational creditor issued a demand notice to the corporate debtor, who admitted the debt but expressed inability to pay. The Adjudicating Authority considered the evidence presented and found that the operational debt was due and payable, with no preexisting dispute from the corporate debtor's side. The Authority noted that the applicant fulfilled the requirements of the Code, and the corporate debtor defaulted in payment.

The Adjudicating Authority referred to the case law of Mobilox Innovative Private Limited vs. Kirusa Software Private Limited to determine the conditions for admitting the application under Section 9. It was established that the operational debt exceeded Rs. 1.00 lac, the debt was due and payable, and there was no dispute or pending suit regarding the debt. The Authority concluded that the operational debt was due to the applicant and met the Code's requirements. The respondent did not raise any dispute, and the debt was not barred by limitation or any other law.

The Authority exercised its discretion under Section 13 of the Code to declare a moratorium, initiating the Corporate Insolvency Resolution Process. The moratorium prohibited various actions against the corporate debtor, including legal proceedings and asset transfers. The Authority directed the Interim Resolution Professional to make a public announcement and call for claim submissions. The moratorium would remain in effect until the completion of the insolvency resolution process or liquidation approval.

The operational creditor proposed an interim resolution professional, and the petition was admitted. The Authority communicated the order to relevant parties and directed the Registrar of Companies not to initiate proceedings to strike off the respondent company's name. This decision aimed to protect stakeholders' interests during the insolvency resolution process and asset realization.

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