Government company insolvency and operational debt default can sustain CIRP despite later objections and disputed interest claims.

A Government company is not excluded from the insolvency framework merely because of State ownership; CIRP may proceed unless the company is shown to be performing sovereign functions or enjoying immunity, which was not established here. The section 9 petition was also held admissible because the demand notice reply and part-payments amounted to admissions of liability, and later objections on dispute, limitation, withholding, short supply and related issues did not negate operational debt and default. The interest question was unnecessary to decide because the principal debt exceeded the admission threshold. The application was allowed and CIRP commenced with moratorium and an Interim Resolution Professional.

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Issues: (i) Whether a corporate debtor that is a Government company can be subjected to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code; (ii) Whether the petition under section 9 was maintainable on the basis of debt and default despite the respondent's objections regarding non-payment, dispute, limitation and interest.

Issue (i): Whether a corporate debtor that is a Government company can be subjected to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code.

Analysis: The statutory definitions of "corporate person" and "Government company" were read together to hold that a Government company is not excluded from the insolvency framework merely because of State ownership. The Code contains no general exemption for Government companies. The decision also noted the qualification that where a company performs sovereign functions or is an instrumentality of the State in a manner attracting immunity, insolvency relief may not lie, but that exception was not established on the facts.

Conclusion: CIRP is maintainable against the respondent despite its status as a Government company.

Issue (ii): Whether the petition under section 9 was maintainable on the basis of debt and default despite the respondent's objections regarding non-payment, dispute, limitation and interest.

Analysis: The respondent's reply to the demand notice and its part-payments were treated as admissions of liability. The Tribunal found that the objections raised later regarding inspection certificates, subsidy-linked payments, short supply, penalty, rate difference, VAT-related withholding and limitation did not dislodge the existence of an operational debt and default. The Tribunal also held that the interest component need not be examined because the principal amount due exceeded the threshold for admission.

Conclusion: The section 9 requirements were satisfied and the petition was admissible.

Final Conclusion: The application was allowed and CIRP was directed to commence against the corporate debtor, with consequential moratorium and appointment of an Interim Resolution Professional.

Ratio Decidendi: A Government company is not immunised from insolvency proceedings under the Code merely by reason of State ownership, and a section 9 petition is admissible where operational debt and default are established through admissions and part-payments, notwithstanding subsequent belated objections.

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