Tribunal Upholds Operational Debt Claim, Initiates Insolvency Resolution Process

The Tribunal found that the Corporate Debtor owed an operational debt to the Operational Creditor, as evidenced by the outstanding amount claimed. Disputes raised by the Corporate Debtor were deemed hypothetical, and the Petition under Section 9 of the Insolvency & Bankruptcy Code, 2016 was considered maintainable. Mr. Dhanshyam Kantilal Patel was appointed as the Interim Resolution Professional, and a Moratorium was declared. The Corporate Insolvency Resolution Process commenced, with the Tribunal directing communication of the order to the parties and the IRP.

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Issues Involved:

1. Whether there exists an operational debt owed by the Corporate Debtor to the Operational Creditor.
2. Whether there is a pre-existing dispute between the parties that would bar the initiation of Corporate Insolvency Resolution Process (CIRP).
3. Whether the Petition under Section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC) is maintainable.
4. Appointment of Interim Resolution Professional (IRP) and declaration of Moratorium.

Issue-Wise Detailed Analysis:

1. Existence of Operational Debt:

The Petitioner, M/s. Infobay Interactive India Private Limited (Operational Creditor), entered into an agreement with the Respondent, M/s. Clear Channel India Private Limited (Corporate Debtor), on 08.08.2014 for exclusive advertisement rights. The Corporate Debtor initially made timely payments but later defaulted. A revised agreement on 09.03.2016 terminated the previous agreement and allowed both parties to compete freely. The Petitioner claimed an outstanding amount of Rs. 1,07,23,700 plus interest Rs. 55,27,734, totaling Rs. 1,62,51,434. The Petitioner issued a demand notice on 19.02.2019, which was not settled by the Corporate Debtor. The Petitioner proposed Mr. Dhanshyam Patel as the IRP, who consented to act in this role.

2. Pre-Existing Dispute:

The Corporate Debtor argued that there was no operational debt and that significant sums were owed to them by the Petitioner. They cited serious disputes existing prior to the demand notice and claimed that the Petitioner breached the terms of the revised agreement. The Corporate Debtor alleged that a former employee, Mr. Jerald Stephen, colluded with the Petitioner, causing a loss of Rs. 2.30 crore. However, the Tribunal found no evidence supporting these allegations and noted that the disputes were hypothetical and illusory. The Corporate Debtor had also deducted and paid TDS for three invoices, indicating acknowledgment of the debt.

3. Maintainability of the Petition:

The Respondent contended that the Petition was not maintainable due to the absence of an operational debt and pre-existing disputes. They also raised issues regarding the stamping of the agreements and the absence of an affidavit and financial institution certificate as required by Section 9(3) of the IBC. The Tribunal found that the Petitioner had provided sufficient evidence of the debt and that the disputes raised by the Corporate Debtor were not genuine. The Tribunal also noted that the deducted TDS on invoices indicated the availing of services by the Corporate Debtor.

4. Appointment of IRP and Declaration of Moratorium:

The Tribunal appointed Mr. Dhanshyam Kantilal Patel as the IRP and declared a Moratorium as per Section 13 read with Section 15 of the IBC. The Moratorium prohibits the institution of any suits or parallel proceedings and the liquidation of the Corporate Debtor's assets until the completion of the Insolvency Resolution process. The IRP is to perform duties as defined under Section 18 of the IBC and report progress within 30 days.

Conclusion:

The Tribunal found that the Corporate Debtor was in default of a debt due and payable, exceeding the minimum amount stipulated under Section 4(1) of the IBC. The Petition under Section 9 was admitted, and the Corporate Insolvency Resolution Process commenced from the date of the order. The Registry was directed to communicate the order to both parties and the IRP immediately.

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