2021 (9) TMI 583 - Tri - Insolvency and Bankruptcy

Tribunal Initiates CIRP Against Corporate Debtor for Payment Default

The Tribunal admitted the Company Petition, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on a ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to repay the dues despite receiving Demand Notice, nor replied to the notice, nor repay the outstanding amount - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Corporate Debtor Mr. Vinod Sharma has admitted the existence of debt and default and in view of the above correspondence the debt and default in this case is establish and the above company petition is liable to be admitted. The petitioner also suggested the name Mr. Manish Motilal Jaju as Interim Resolution Professional and enclosed the consent letter given by the proposed IRP in Form-2. The above company petition is complete in all respects. Time Limitation - HELD THAT:- The present petition is filed on 15.06.2021, and the amount is less than ₹ 1 crore. But the default occurred on 01.12.2019, hence Section 10A will not affect the present petition from getting admitted. This tribunal is of the considered opinion that the company petition is liable to be admitted - Petition admitted - moratorium declared. Issues:1. Initiation of Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor for default in payment.2. Admissibility of the Company Petition under the Insolvency and Bankruptcy Code.3. Appointment of an Interim Resolution Professional and related obligations.4. Imposition of moratorium and restrictions on the Corporate Debtor during the CIRP.5. Direction for public announcement of the insolvency resolution process.6. Vesting of management in the IRP/RP during the CIRP period.Analysis:1. The Company Petition was filed seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on a payment of Rs. 17,25,000, invoking Sections 8 & 9 of the Insolvency & Bankruptcy Code. The Petitioner completed the interior designing work to the satisfaction of the Corporate Debtor, who failed to clear the invoice within the stipulated time, leading to the demand for payment and subsequent legal actions.2. The Tribunal found that the debt and default were established, with the Corporate Debtor admitting the existence of the debt. The petition was deemed complete, and the Tribunal noted that Section 10A, which prohibits applications for defaults after a specified date, did not affect the admissibility of the present petition due to the default occurring prior to the mentioned date.3. The Tribunal admitted the Company Petition, initiating the CIRP against the Corporate Debtor. Mr. Manish Motilal Jaju was appointed as the Interim Resolution Professional, with specific functions outlined under the Insolvency & Bankruptcy Code. The Petitioner was directed to deposit an initial CIRP cost, and various prohibitions were imposed on the Corporate Debtor, including legal actions and asset disposal restrictions.4. A moratorium was ordered, preventing suits or proceedings against the Corporate Debtor, asset transfers, and enforcing security interests. Essential goods or services supply to the Corporate Debtor during the moratorium period was not to be terminated. Specific transactions exempt from Section 14 provisions were mentioned, and the moratorium was to be in effect until the completion of the CIRP or approval of a resolution plan.5. The Tribunal directed the immediate public announcement of the insolvency resolution process and mandated the management of the Corporate Debtor to vest in the IRP/RP during the CIRP period. Suspended directors and employees were required to provide necessary documents and information to the IRP/RP.6. The Registry was instructed to communicate the order to both parties and the IRP promptly, ensuring compliance with the directives outlined in the judgment.