Tribunal Admits Creditor's Insolvency Application against Debtor for Non-Payment

The Tribunal admitted the Operational Creditor's application under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor for non-payment of dues amounting to Rs. 2,46,359. The Corporate Debtor failed to contest the application, leading to an ex-parte order. The Tribunal found that the debt was undisputed, within the limitation period, and met the prescribed threshold under Section 41 of IBC. It declared a moratorium under Section 14(1), appointed an Interim Resolution Professional, and directed cooperation from all personnel associated with the Corporate Debtor for the smooth conduct of the process.

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Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of IBC, 2016 against a Corporate Debtor for non-payment of dues.

Analysis:
The Operational Creditor filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor. The claimed debt in default amounted to Rs. 2,46,359, including interest. The Operational Creditor, a Private Limited Company, supplied materials to the Corporate Debtor as per a purchase order, issued an invoice, and later sent a demand notice for the outstanding amount. Despite partial payment by the Corporate Debtor, the remaining due amount was not settled. The Corporate Debtor failed to contest the application, leading to an ex-parte order against them.

Upon review, the Tribunal found that goods were supplied, an invoice was issued, and a demand notice was served to the Corporate Debtor. The Corporate Debtor made partial payment but failed to clear the entire due amount. The Tribunal noted the absence of a pre-existing dispute regarding the debt and determined that the application was within the limitation period and met the prescribed threshold under Section 41 of IBC. Consequently, the Tribunal admitted the application and declared a moratorium under Section 14(1) of the Code, prohibiting various actions against the Corporate Debtor.

The Tribunal ordered the appointment of an Interim Resolution Professional (IRP) and directed the IRP to carry out specified functions as per the Code. It emphasized the obligation of all personnel associated with the Corporate Debtor to cooperate with the IRP. The IRP was tasked with making a public announcement of the CIRP initiation, managing operations, and preserving the value of the Corporate Debtor's property. The Operational Creditor was instructed to make an advance payment to the IRP for the smooth conduct of CIRP.

Additionally, the Tribunal directed the Registry to communicate the order to relevant parties and upload it on the website. Ultimately, the Tribunal allowed the application, CP(IB)/401/2020, thereby initiating the Corporate Insolvency Resolution Process against the Corporate Debtor for non-payment of dues.

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