2021 (5) TMI 499 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application against Corporate Debtor |

The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by the Operational Creditor against the Corporate ... Admissibility of Section 9 application under the Insolvency and Bankruptcy Code, 2016 - operational debt and default - date of default and limitation - ex parte proceedings for non-appearance of corporate debtor - appointment of interim resolution professional and commencement of CIRP - moratorium under Section 14 of the Code - provision for interim expenses to be deposited by the applicantAdmissibility of Section 9 application under the Insolvency and Bankruptcy Code, 2016 - operational debt and default - Application under Section 9 filed by the operational creditor is admissible and is to be admitted initiating CIRP against the corporate debtor on account of admitted operational debt. - HELD THAT: - The Tribunal found the application complete and was satisfied on the basis of the material on record that an operational debt of Rs. 63,36,049/- in respect of unpaid invoices stood due and payable by the corporate debtor and remained unpaid. The corporate debtor, though raising disputes in its reply to the demand notice, did not appear before the Adjudicating Authority to substantiate those contentions, and the Authority proceeded ex parte. In light of the applicant's proof of supply, invoices, service of demand notice and the lack of defence before the Tribunal, the application met the requirements for admission under Section 9 and commencement of the corporate insolvency resolution process was ordered. [Paras 10, 13]Section 9 application admitted; CIRP ordered to commence against the corporate debtor.Date of default and limitation - The application is not time-barred; the date of default is 27.09.2019 and the Section 9 application filed on 16.02.2020 is within limitation. - HELD THAT: - The Tribunal identified the date of the last unpaid invoice as 27.09.2019 and treated that date as the date of default. Comparing that date with the filing date of the Section 9 application (16.02.2020), the Tribunal concluded that the application was filed within the prescribed period and was not barred by limitation. [Paras 11]Application held within limitation; date of default fixed as 27.09.2019.Ex parte proceedings for non-appearance of corporate debtor - The corporate debtor's non-appearance before the Adjudicating Authority led to ex parte proceedings. - HELD THAT: - Although the corporate debtor filed a reply to the demand notice raising disputes, it failed to appear before the Adjudicating Authority to support those contentions. The Tribunal recorded that in the absence of appearance or defence before the Authority, the proceedings were conducted ex parte and that circumstance contributed to the presumption favouring admission of the application. [Paras 10, 13]Proceedings ordered ex parte against the corporate debtor for non-appearance; presumption in favour of admission noted.Appointment of interim resolution professional and commencement of CIRP - moratorium under Section 14 of the Code - provision for interim expenses to be deposited by the applicant - Interim reliefs and administrative steps were directed: appointment of the proposed IRP, imposition of moratorium, and deposit of interim expenses by the applicant. - HELD THAT: - The Tribunal appointed the interim resolution professional proposed by the applicant and directed him to perform statutory duties under the Code and to file reports. A moratorium in terms of Section 14 was imposed immediately, restraining institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property as specified. The applicant was directed to deposit a sum to meet immediate IRP expenses, to be accounted for and recoverable as CIRP costs. Directions were also given for communication of the order to the IRP, IBBI and ROC and for provision of the paper book to the IRP. [Paras 14, 15, 16, 17]Proposed IRP appointed; moratorium imposed; applicant directed to deposit interim expenses; administrative communications ordered.Final Conclusion: The Tribunal admitted the Section 9 application, held the operational debt of Rs. 63,36,049/- to be due and payable and not time-barred, proceeded ex parte against the corporate debtor for non-appearance, appointed the proposed interim resolution professional, imposed the moratorium under the Code and directed deposit of interim expenses by the applicant. Issues:- Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency process.- Claim of unpaid invoices by Operational Creditor against Corporate Debtor.- Disputes raised by Corporate Debtor in response to the demand notice.- Jurisdiction of the Tribunal to entertain the application.- Timeliness of the application.- Appointment of interim resolution professional.- Imposition of moratorium under Section 14 of the Code.- Direction for deposit by the Applicant for immediate expenses.- Communication and compliance requirements post-order.Analysis:1. The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Operational Creditor against the Corporate Debtor for unpaid invoices totaling to Rs. 63,36,049. The Operational Creditor, engaged in the sale and installation of equipment, alleged non-payment by the Corporate Debtor despite reminders and a demand notice issued under the Code.2. The Corporate Debtor, engaged in building installation, contested the claims stating issues with the work order, project delays, and poor quality work. Disputes regarding after-sales services and payment of bills were raised by the Corporate Debtor, leading to a lack of resolution between the parties.3. The Tribunal found that the application was within the period of limitation and had jurisdiction to entertain the matter since the registered office of the Corporate Debtor was in Delhi. The Corporate Debtor failed to respond to the application or appear before the Tribunal, resulting in an ex-parte proceeding against them.4. Considering the facts and material on record, the Tribunal admitted the application, ordering the commencement of the Corporate Insolvency Resolution Process. An interim resolution professional was appointed to oversee the process and submit a report within 30 days, as mandated by the Code.5. A moratorium was imposed under Section 14 of the Code, restricting various actions against the Corporate Debtor's assets. The Applicant was directed to deposit Rs. 2 lakhs to cover immediate expenses, which would be reimbursed as part of the costs of the Corporate Insolvency Resolution Process.6. Post-order, communication and compliance requirements were outlined, including the dissemination of the order to the parties involved, the appointed IRP, IBBI, and ROC for record-keeping and updates. The application was allowed and disposed of in accordance with the Tribunal's order.