2021 (8) TMI 20 - Tri - Insolvency and Bankruptcy

Tribunal Admits Company Petition for Insolvency Proceedings

The tribunal admitted the company petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, allowing the initiation of Corporate Insolvency ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditor - existence of debt and dispute or not - case of respondent is that the corporate debtor has made certain payments for which corporate debtor has no proof and the Corporate Debtor Company is being run by a first generation lady entrepreneur and if the Corporate Debtor was pushed into CIRP it would cause great prejudice to the promoter of the company - HELD THAT:- The corporate debtor did not place any FIR before this tribunal to show that the said police report against the said Ankit Gupta was acted upon by police. Even otherwise the Operational Creditor is not responsible for the said acts of the staff member of the corporate debtor as the corporate debtor alone is vicariously liable as a master for the acts of it’s employees/servants. Even otherwise the Operational creditor issued demand notice for a balance amount of ₹ 9,50,000/- and even if the alleged discharge of ₹ 6,00,000/- is accepted assuming for a moment without admitting for argument sake, the Corporate Debtor still ows ₹ 3,50,000/- (which is more than 1,00,000/-) which is enough for admission of the company petition. Therefore, it is not legally correct to accept the contentions of the corporate debtor. Keeping in mind its previous conduct coupled with the absence of evidence with regard to the discharge of ₹ 6,00,000/-. There are no warranting grounds to dismissed the company petition and accordingly, the above company petition is admitted by passing the following order - Petition allowed - moratorium declared. Issues:1. Initiation of Corporate Insolvency Resolution Process against the corporate debtor.2. Dispute over outstanding payments and settlement terms.3. Allegations of misplaced cash vouchers and alleged payments.4. Legal implications and decision on admitting the company petition.Issue 1: Initiation of Corporate Insolvency Resolution Process against the corporate debtor.The company petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Operational Creditor against the Corporate Debtor, seeking initiation of Corporate Insolvency Resolution Process. The petition highlighted the default in payments by the Corporate Debtor, leading to the demand for resolution through the NCLT Mumbai Bench.Issue 2: Dispute over outstanding payments and settlement terms.The Operational Creditor had a continuous supply agreement with the Corporate Debtor for art papers. Despite settlement attempts and partial payments made by the Corporate Debtor, subsequent bounced cheques and outstanding amounts led to the filing of multiple company petitions. The respondent disputed the outstanding amount, citing misplaced cash vouchers and alleged payments made, which were contested by the Operational Creditor.Issue 3: Allegations of misplaced cash vouchers and alleged payments.The respondent claimed that the cash vouchers for a significant payment were misplaced due to the actions of a former employee, leading to settlement terms with the Operational Creditor. However, the tribunal found the respondent's contentions unconvincing, emphasizing the lack of evidence and the responsibility of the Corporate Debtor for its employees' actions. The tribunal dismissed the respondent's claims and upheld the Operational Creditor's right to seek resolution for the outstanding amount.Issue 4: Legal implications and decision on admitting the company petition.After thorough analysis of the submissions and previous conduct of the parties, the tribunal concluded that there were sufficient grounds to admit the company petition. The tribunal allowed the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, appointing an Interim Resolution Professional and imposing necessary restrictions and moratoriums as per the Insolvency & Bankruptcy Code, 2016. The decision highlighted the importance of evidence and adherence to legal procedures in insolvency matters.This detailed analysis of the judgment outlines the key issues involved, the arguments presented by both parties, and the tribunal's decision to admit the company petition for the initiation of Corporate Insolvency Resolution Process.