2021 (10) TMI 1079 - Tri - Insolvency and Bankruptcy

Operational Creditor's Claim Deemed Valid in Company Petition Case

The Company petition was admitted, and an Interim Resolution Professional was appointed to oversee the Corporate Insolvency Resolution Process (CIRP) ... 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:- The Bench notes that the ample opportunity was given to the Corporate Debtor to file its reply. However, the Corporate Debtor failed to file reply before this Bench - The Bench further notes that till the date of the final hearing the Corporate Debtor did not choose to file any reply contesting above Company Petition and also did not comply the order dated 01.03.2021 wherein he was directed to file reply. Therefore, the Corporate Debtor's right to file reply was forfeited. The counsel appearing for the Financial Creditor invited the attention of this Tribunal to the relevant documents filed in proof of debt and default in support of company petition. Since the Respondent/Corporate Debtor did not file any reply, the claim of the Financial Creditor remains unchallenged. 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. Thus, the present Company Petition satisfies all the necessary requirements for admission. Petition admitted - moratorium declared. Issues:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code.2. Operational debt and default by the Corporate Debtor.3. Failure of the Corporate Debtor to respond to demand notices and file a reply.4. Admissibility of the Company Petition and appointment of Interim Resolution Professional (IRP).Issue 1: Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code:The Company petition was filed by the Operational Creditor seeking to initiate CIRP against the Corporate Debtor by invoking the provisions of Section 9 of the Insolvency and Bankruptcy Code. The Operational Creditor had raised invoices for the supply of goods and materials to the Corporate Debtor, and despite repeated assurances and commitments, the Corporate Debtor failed to pay the outstanding operational debt, leading to the petition for CIRP.Issue 2: Operational debt and default by the Corporate Debtor:The Operational Creditor submitted that the Corporate Debtor had issued purchase orders and accepted invoices without objection. The total outstanding amount was specified, and despite partial payments, a significant balance remained unpaid. The Corporate Debtor acknowledged the liability to pay the debt amount in an email and agreed to share a payment plan, but failed to follow through on the commitments, leading to the default situation.Issue 3: Failure of the Corporate Debtor to respond to demand notices and file a reply:The Corporate Debtor was given multiple opportunities to file replies and contest the Company Petition. However, the Corporate Debtor failed to file any reply before the Bench, forfeiting the right to do so. The Financial Creditor's claim remained unchallenged due to the lack of response from the Corporate Debtor, establishing the debt and default clearly.Issue 4: Admissibility of the Company Petition and appointment of Interim Resolution Professional (IRP):The Bench found no valid grounds to reject the Company Petition as the debt and default were established, and the debt was within the limitation period. Due to the lack of response from the Corporate Debtor, the Company Petition satisfied all necessary requirements for admission. Consequently, the Company Petition was admitted, and an Interim Resolution Professional was appointed from the list provided by the Insolvency and Bankruptcy Board of India to oversee the CIRP process.This detailed analysis of the judgment highlights the key issues involved in the case, including the initiation of CIRP, operational debt and default, the Corporate Debtor's failure to respond, and the admissibility of the Company Petition leading to the appointment of an Interim Resolution Professional.