2022 (1) TMI 452 - Tri - Insolvency and Bankruptcy

Tribunal Admits Company Petition for Insolvency: Key Orders Issued

The Tribunal admitted the Company Petition filed by the Operational Creditor, initiating the Corporate Insolvency Resolution Process (CIRP) against the ... 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:- It is seen from the records that this Tribunal had given sufficient chances to the Corporate Debtor to file its Reply. However, the Corporate Debtor failed to appear and did not file its Reply. This act itself shows that the amount is due and payable to the Operational Creditor - the Operational Creditor filed an Affidavit of Service dated 17.08.2021. This bench observes that the Operational Creditor has served and intimated the date of hearings to the Corporate Debtor on several occasions and finally the Corporate Debtor was set to be ex-parte vide Order dated 01.11.2021. The Operational Creditor has successfully demonstrated and proved the debt and default in this case and has also proved that there is absolutely no reason for the Corporate Debtor to hold on to the payment of the invoices - this Bench is left with no option except to admit the above Company Petition, since the Company Petition in hand satisfies all necessary legal ingredients for admission under Section 9 of the Code. Petition admitted - moratorium declared. Issues:1. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on default in payment.2. Submissions of the Operational Creditor detailing the debt and breach of contract.3. Lack of appearance and submissions from the Corporate Debtor.4. Findings of the Tribunal regarding debt, default, and procedural compliance.5. Decision and orders passed by the Tribunal admitting the Company Petition and appointing an Interim Resolution Professional.Issue 1: Initiation of CIRPThe Company Petition filed by the Operational Creditor sought to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to alleged default in payment. The petition invoked Section 9 of the Insolvency and Bankruptcy Code, 2016, and Rule 6 of the relevant rules.Issue 2: Operational Creditor's SubmissionsThe Operational Creditor detailed the debt arising from services provided for repair of machinery and supply of spare parts to the Corporate Debtor. Various invoices were issued for the services rendered, and the debt was claimed to be a result of breach of contract under the Contract Act, 1872, read with the Insolvency & Bankruptcy Code, 2016. The Operational Creditor also highlighted communication, demand notices, and attempts to resolve the outstanding dues.Issue 3: Lack of Appearance by Corporate DebtorThe Corporate Debtor did not appear before the Tribunal, leading to the presumption that there was no substantial defense to present. Email correspondences indicated an admitted debt by the Corporate Debtor, further strengthening the case for default.Issue 4: Tribunal FindingsThe Tribunal noted the lack of response from the Corporate Debtor despite multiple opportunities provided. It observed the efforts made by the Operational Creditor to serve notices and communicate hearing dates. The Tribunal concluded that the debt and default were adequately demonstrated, leaving no reason for the Corporate Debtor to withhold payment, leading to the admission of the Company Petition under Section 9 of the Code.Issue 5: Tribunal Decision and OrdersThe Tribunal admitted the Company Petition, initiating the CIRP against the Corporate Debtor. It appointed an Interim Resolution Professional and directed the Operational Creditor to deposit a specified amount towards CIRP costs. Various orders were passed, including a moratorium on legal actions against the Corporate Debtor, continuation of essential services, and vesting of management in the IRP/RP during the CIRP period.This detailed analysis covers the legal judgment involving the initiation of CIRP based on default, submissions by the Operational Creditor, lack of appearance by the Corporate Debtor, Tribunal findings, and the subsequent decision and orders issued by the Tribunal.