Tribunal Grants Corporate Insolvency Resolution Process

The Tribunal allowed the application for Corporate Insolvency Resolution Process under Section 9 of IBC against the Corporate Debtor due to default in payment of operational debt amounting to Rs. 10,54,179. The Corporate Debtor admitted owing Rs. 3,28,800, failed to respond to the demand notice, and did not return the goods in question. Consequently, the Tribunal declared a moratorium under Section 14 of IBC, appointed an Insolvency Resolution Professional, and instructed the Operational Creditor to pay an advance for the resolution process.

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Issues:
Application under Section 9 of IBC for Corporate Insolvency Resolution Process due to default in payment of operational debt.

Analysis:
The application was filed by an Operational Creditor against a Corporate Debtor for defaulting on a debt of Rs. 10,54,179. The debt arose from the sale of Gas Fired Trolley Oven, with part of the amount remaining unpaid due to alleged defects in the goods supplied. Despite a legal notice and demand notice, the Corporate Debtor failed to pay the outstanding amount, leading to the initiation of the insolvency resolution process.

Legal Arguments:
The Operational Creditor argued that the Corporate Debtor had admitted the debt in a reply and failed to respond to the demand notice under Section 8 of IBC, indicating a lack of a pre-existing dispute. On the other hand, the Corporate Debtor contended that there was a dispute regarding the quality of the goods sold, claiming the goods were sub-standard. However, the Corporate Debtor's defense was deemed weak as it did not return the goods or make the outstanding payment.

Judgment:
The Tribunal found that the Corporate Debtor had admitted to owing Rs. 3,28,800 to the Operational Creditor, failed to respond to the demand notice, and did not return the goods in question. As a result, the application for Corporate Insolvency Resolution Process was allowed. The moratorium under Section 14 of IBC was declared, appointing an Insolvency Resolution Professional to oversee the resolution process. The IRP was directed to manage the operations of the Corporate Debtor and ensure the continuation of supplies during the moratorium period. Additionally, the Operational Creditor was instructed to pay an advance to the IRP for the smooth conduct of the resolution process. The judgment was communicated to all relevant parties for compliance.

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