Tribunal Allows Corporate Insolvency Against Debtor for Default in Payment

The Tribunal admitted the application under section 9(5) of the Insolvency and Bankruptcy Code, 2016, allowing the Applicant, a private limited company, to initiate Corporate Insolvency proceedings against the Corporate Debtor, another private limited company, due to the established default in payment of outstanding dues amounting to Rs. 1,55,79,348. An Insolvency Resolution Professional (IRP) was appointed by the Tribunal, and operational creditors were directed to deposit funds for expenses. A moratorium period was imposed on the Corporate Debtor as per Section 14(1) of the Code.

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Issues: Application under section 9 of Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency process against a private limited company.

Analysis:
1. The Applicant, a private limited company, filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency process against the Corporate Debtor, also a private limited company. The Applicant was authorized to file the application through a board resolution. The Applicant and the Corporate Debtor had entered into various agreements for property management services, with outstanding dues of Rs. 1,55,79,348. The Applicant issued a demand notice under section 8 of the I&B Code, which was duly delivered to the Corporate Debtor. The Corporate Debtor failed to respond or make any payment towards the outstanding dues, leading to the filing of the present application.

2. The Applicant submitted that the Corporate Debtor had not disputed the unpaid operational debt, and the debt was not time-barred as the application was filed within the period of limitation. The Tribunal found that the application was complete, and the Applicant was entitled to claim its dues, as the default in payment by the Corporate Debtor was established beyond doubt. Consequently, the application was admitted under section 9(5) of the IBC, 2016.

3. The Tribunal appointed an Insolvency Resolution Professional (IRP) since the Applicant had not named one. Mr. Bikram Singh Gusain was appointed as the IRP, subject to certain conditions and disclosures. The Operational Creditors were directed to deposit a sum of Rs. 2 lakhs with the IRP to meet expenses. The moratorium period, as per Section 14(1) of the Code, was imposed on the Corporate Debtor, with specific provisions coming into force during this period. The order was communicated to the Applicant, Corporate Debtor, and IRP, with additional copies sent to relevant authorities for record-keeping and compliance purposes.

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