Tribunal initiates CIRP against debtor, appoints IRP, and declares moratorium

The Tribunal found in favor of the operational creditor, admitting the petition and initiating the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. An Interim Resolution Professional (IRP) was appointed to oversee the process, and a moratorium was declared with specific directions to prevent suits, asset transfers, and ensure essential supplies continue. The moratorium will last until the completion of the CIRP, approval of a resolution plan, or liquidation is ordered. The operational creditor was directed to deposit funds for expenses, and public announcement of the CIRP was required.

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Issues Involved:
1. Default in payment of Rs. 1,77,15,636 along with interest by the corporate debtor.
2. Requirement of statutory demand notice under Section 8 of the IBC.
3. Dispute regarding the quality of goods supplied.
4. Allegation of misuse of blank cheques.
5. Pre-existing disputes and pending civil suits.
6. Appointment of Interim Resolution Professional (IRP).
7. Declaration of moratorium and related directions.

Issue-wise Detailed Analysis:

1. Default in Payment:
The petitioner, M/s. Binjusaria Ispat P. Ltd., alleged that M/s. Abhirama Steels Ltd. defaulted on a payment of Rs. 1,77,15,636 along with 18% interest from April 4, 2016, to March 4, 2019. The operational creditor supplied Mild Steel Billets to the corporate debtor, who failed to pay despite repeated demands and a memorandum of understanding (MoU) dated February 13, 2016, acknowledging the debt and issuing cheques which were dishonored.

2. Statutory Demand Notice:
The corporate debtor argued that the petition is not maintainable as the operational creditor failed to send a statutory demand notice under Section 8 of the IBC. The operational creditor contended that a notice was issued on April 13, 2016, under Section 434 of the Companies Act, acknowledged by the corporate debtor, thus fulfilling the requirement.

3. Quality of Goods Supplied:
The corporate debtor claimed the supplied materials were defective and informed the operational creditor, who failed to rectify the issue. The operational creditor denied these claims, stating no dispute regarding the quality was raised before the demand notice, terming the dispute as a "moon shine" to escape liability.

4. Allegation of Misuse of Blank Cheques:
The corporate debtor alleged that blank cheques given as security were misused by the operational creditor. The operational creditor countered this by stating that the cheques were part of the MoU and were dishonored due to insufficient funds, indicating a clear default.

5. Pre-existing Disputes and Pending Civil Suits:
The corporate debtor cited a pending civil suit (O.S. No. 487 of 2016) for damages due to defective material, claiming it as a pre-existing dispute. The operational creditor noted the suit was dismissed for default and termed the dispute as spurious. The Tribunal found the dispute to be not genuine and aimed at avoiding payment.

6. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Maruti Venkata Subba Rao Poluri as the IRP, as recommended by the Insolvency and Bankruptcy Board of India (IBBI), to oversee the Corporate Insolvency Resolution Process (CIRP).

7. Declaration of Moratorium and Related Directions:
The Tribunal admitted the petition under Section 9 of the IBC, 2016, and declared a moratorium with the following directions:
- Prohibition of suits or continuation of pending suits against the corporate debtor.
- Prevention of transferring or disposing of assets by the corporate debtor.
- Continuation of essential goods or services supply to the corporate debtor.
- The moratorium will last until the completion of the CIRP or until a resolution plan is approved or liquidation is ordered.
- The petitioner was directed to deposit Rs. 2,00,000 with the IRP for expenses and fees.
- Immediate public announcement of the CIRP.
- The registry to update the corporate debtor's status on the MCA-21 site.

Conclusion:
The Tribunal found in favor of the operational creditor, admitting the petition and initiating the CIRP against the corporate debtor, appointing an IRP, and declaring a moratorium with specific directions to ensure compliance with the IBC, 2016.

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