2021 (6) TMI 88 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application, Declares Moratorium: IRP Appointed

The Tribunal admitted the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, declaring a moratorium under Section 14(1) and ... 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 not in dispute that last supply has been made in May, 2016 and invoice for the same has been raised on 09.05.2016. The application has been filed on 20.11.2019. It has been claimed by the Corporate Debtor that this application was liable to be dismissed on the ground of limitation itself as there is no acknowledgement by the Corporate Debtor from the date of such invoice till the filing of application under Section 9 by the Operational Creditor. Pre-existing dispute - HELD THAT:- The Corporate Debtor has failed to show that such letters had actually been issued and delivered to the Operational Creditor. Thus, no credibility of such letters exists in law. Having held so, now, the fact is noted that Corporate Debtor has not replied the notice issued under Section 8 of IBC, 2016 and for this reason alone, this application is liable to be admitted particularly when no reasonable cause has been shown even during the course of hearing as to why such reply was not given. Petition allowed - moratorium declared. Issues Involved:1. Validity of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016.2. Bar of limitation on the debt claimed.3. Existence of pre-existing disputes.4. Requirement of a reply to the notice under Section 8 of IBC, 2016.5. Appointment of Interim Resolution Professional (IRP).Detailed Analysis:1. Validity of the Application under Section 9 of the Insolvency & Bankruptcy Code, 2016:The application was filed by the Operational Creditor under Section 9 of the IBC, 2016 for initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Operational Creditor claimed an amount of Rs. 14,57,267 plus interest. The Corporate Debtor argued that the notice under Section 8 was not submitted in the correct form and lacked necessary documents. However, the Tribunal found that the notice, in substance, contained all required particulars, and thus, the application could not be dismissed on this ground alone.2. Bar of Limitation on the Debt Claimed:The Corporate Debtor contended that the debt was barred by limitation as the last invoice was raised on 09.05.2016, and the application was filed on 20.11.2019, beyond the three-year limitation period. The Tribunal examined various emails sent by the Operational Creditor requesting payment and found an email dated 25.03.2017, which was not refuted by the Corporate Debtor within the specified period. This non-reply was considered an acknowledgment of debt, thus extending the limitation period.3. Existence of Pre-Existing Disputes:The Corporate Debtor claimed pre-existing disputes based on two letters dated 15.03.2016 and 10.04.2016 regarding the quality of goods. However, the Tribunal observed that the Corporate Debtor failed to show that these letters were actually delivered to the Operational Creditor. Consequently, no credibility was given to these letters, and the plea of pre-existing disputes was rejected.4. Requirement of a Reply to the Notice under Section 8 of IBC, 2016:The Tribunal emphasized the importance of the Corporate Debtor replying to the notice under Section 8 within the stipulated 10 days. The Corporate Debtor did not reply to the notice, which was considered an incurable defect. The Tribunal referred to several judgments, including Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, highlighting that adherence to the 10-day timeline is mandatory. The failure to reply within this period led to the admission of the application.5. Appointment of Interim Resolution Professional (IRP):The Tribunal noted that the Operational Creditor had not proposed the name of an IRP, which is not mandatory under Section 9. Therefore, the Tribunal appointed Mr. Ashish Anantray Shah as the IRP from the list approved by the Insolvency and Bankruptcy Board of India (IBBI). The IRP was directed to perform all functions as per Sections 17, 18, 20, and 21 of the Code and to make a public announcement of the initiation of CIRP.Conclusion:The Tribunal admitted the application and declared a moratorium under Section 14(1) of the IBC, 2016, prohibiting various actions against the Corporate Debtor. The IRP was directed to protect and preserve the value of the Corporate Debtor's property and manage its operations as a going concern. The Operational Creditor was ordered to advance Rs. 50,000 to the IRP for the smooth conduct of the CIRP. The Registry was instructed to communicate the order to all relevant parties and upload it on the website.Order:1. The application is admitted, and a moratorium is declared.2. The IRP is appointed and directed to carry out his duties as per the Code.3. The Operational Creditor is directed to pay an advance of Rs. 50,000 to the IRP.4. The Registry is directed to communicate the order to all relevant parties and upload it on the website.The application CP (IB) No. 827/9/NCLT/AHM/2019 is allowed.