Tribunal admits Company Petition, initiates CIRP, appoints IRP, declares moratorium.

The Tribunal admitted the Company Petition and initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. An Interim Resolution Professional (IRP) was appointed, and a moratorium was declared on certain actions against the Corporate Debtor. The IRP was directed to comply with the provisions of the IBC, 2016, and report progress to the Tribunal. The Board of Directors and staff of the Corporate Debtor were instructed to cooperate with the IRP, with the case scheduled for the IRP's report on 28th May, 2021.

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Issues Involved:

1. Whether the Corporate Debtor committed default in payment of the principal amount and interest to the Operational Creditor.
2. Whether the conditions of the Agreement for Sale & Purchase of Power Plant Equipment were adhered to by both parties.
3. Whether the NOC from IREDA was provided and communicated to the Petitioner.
4. Whether the dispute raised by the Respondent is bona fide and pre-existing.
5. Whether the claim amount constitutes an operational debt under IBC, 2016.
6. Whether the Corporate Insolvency Resolution Process (CIRP) should be initiated against the Corporate Debtor.

Issue-wise Detailed Analysis:

1. Default in Payment:
The Petitioner alleged that the Corporate Debtor defaulted on a principal amount of Rs. 90,00,000 and interest of Rs. 24,85,479.45 calculated at 18% p.a. The Petitioner provided evidence of the Demand Drafts towards the first installment payment. Despite repeated requests and a Demand Notice dated 06.08.2019, the Respondent failed to repay the outstanding amount.

2. Adherence to Agreement Conditions:
The Agreement stipulated that the Respondent must obtain an NOC from IREDA within two weeks of receiving the first installment and issue a Letter of Authorization for dismantling the plant. The Petitioner claimed that the Respondent failed to obtain the NOC and issue the authorization, thereby breaching the contract. The Respondent countered that the Petitioner failed to adhere to the payment schedule for the second installment, leading to the cancellation of the agreement and forfeiture of the advance paid.

3. Provision and Communication of NOC:
The Respondent provided copies of NOCs dated 09.08.2018 and 16.08.2018 but failed to show proof of communication of these NOCs to the Petitioner. The Petitioner argued that without receiving the NOC, they could not proceed with the dismantling work or make further payments. The Tribunal found no evidence of the NOCs being communicated to the Petitioner.

4. Bona Fide and Pre-existing Dispute:
The Respondent claimed a pre-existing dispute due to the Petitioner's failure to make the second installment payment. However, the Tribunal noted that the Respondent did not provide sufficient documentary evidence of communication regarding the cancellation of the agreement or the alleged defaults. The Tribunal referenced the Supreme Court's ruling in "Mobilox Innovations Private Limited v. Kirusa Software Private Limited," stating that a dispute must be bona fide and supported by evidence.

5. Operational Debt:
The Respondent argued that the claim amount was not an operational debt, citing the decision in "KLA Construction Technologies V. CKG Realty." The Petitioner countered that the case involved a refund of monies due to the Respondent's failure to adhere to the agreement, not non-payment of advance monies. The Tribunal agreed with the Petitioner, finding that the amount constituted an operational debt.

6. Initiation of CIRP:
The Tribunal found that the Respondent failed to produce evidence of communication of the NOC to the Petitioner and that the Respondent's plea appeared to be an attempt to avoid payment. The Petitioner provided sufficient evidence of the debt, including an NESL Certificate and bank statements. The Tribunal concluded that there was an operational debt that had fallen due and remained unpaid. Consequently, the Tribunal admitted the petition and initiated the CIRP against the Corporate Debtor.

Conclusion:
The Tribunal admitted the Company Petition and initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, appointing an Interim Resolution Professional (IRP) and declaring a moratorium on certain actions against the Corporate Debtor. The Tribunal directed the IRP to follow the provisions of the IBC, 2016, and report progress to the Tribunal. The Board of Directors and staff of the Corporate Debtor were instructed to cooperate with the IRP. The case was posted for the IRP's report on 28th May, 2021.

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