2021 (10) TMI 537 - Tri - Insolvency and Bankruptcy

Company Petition Admitted, CIRP Initiated for Corporate Debtor | Debt, Liability, Payment Failure | Stakeholders Protected

The Tribunal admitted the Company Petition and initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The decision was ... Maintainability of application - initiation of CIRP - Dishonor of Cheque - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The matter has been listed on board from time to time since August 2019. The Director of the Corporate Debtor is putting up appearance regularly before this Bench and did not choose to file any reply. On the other hand, the Director of the Corporate Debtor admitted the liability and made a statement that they will discharge the liability of all their creditors in few days. However, nothing happened. Finally, on 04.08.2021 when the matter was listed on board for final hearing Mr. Anaveer Nanna, Director of the Company appeared through virtual hearing and made the same request which is outrightly liable to be rejected. It is very clear from the conduct of the Corporate Debtor and the various orders passed by this Bench from time to time that the Corporate Debtor having admitted the liability is not inclined to resolve the same and the above Company Petition shall be admitted forthwith. There are no valid grounds warranting the rejection of the above Company Petition as the debt and default are clearly established and the debt is also within limitation - Petition admitted - moratorium declared. Issues:1. Initiation of Corporate Insolvency Resolution Process under section 9 of the Code against the Corporate Debtor.Analysis:The Company Petition was filed by the Operational Creditor under section 9 of the Code against the Corporate Debtor for the initiation of Corporate Insolvency Resolution Process (CIRP). The Operational Creditor had previously filed a petition for resolution of debt, and despite partial payments made by the Corporate Debtor, the outstanding amount remained unpaid. Legal notices were issued, and the Corporate Debtor acknowledged the liability but failed to make the full payment. The Corporate Debtor's director admitted the liability but continuously delayed payment, leading to the filing of the current Company Petition.The Tribunal noted that the Corporate Debtor had admitted the liability and repeatedly assured payment without fulfilling the commitment. The Corporate Debtor's conduct, including non-compliance with legal notices and failure to make payments, indicated a lack of willingness to resolve the outstanding debt. The Tribunal found no valid grounds to reject the Company Petition as the debt and default were clearly established, and the debt was within the limitation period. Consequently, the Tribunal admitted the Company Petition and ordered the initiation of CIRP against the Corporate Debtor.The Tribunal issued various orders as part of the judgment, including appointing an Interim Resolution Professional (IRP) from the list provided by the Insolvency and Bankruptcy Board of India, directing the Financial Creditor to deposit an amount towards initial CIRP costs, imposing a moratorium on legal actions against the Corporate Debtor, ensuring the supply of essential goods or services is not interrupted, and specifying the effect and duration of the moratorium period. Additionally, the management of the Corporate Debtor during the CIRP period was vested in the IRP/RP, and the Registry was instructed to update the Master Data of the Corporate Debtor.In conclusion, the Tribunal's decision to admit the Company Petition and initiate CIRP against the Corporate Debtor was based on the established debt, the Corporate Debtor's admission of liability, and the failure to make timely payments despite assurances. The judgment outlined detailed provisions and directions to manage the insolvency resolution process effectively and protect the interests of all stakeholders involved.