2022 (2) TMI 95 - Tri - Insolvency and Bankruptcy

NCLT Chandigarh: Key Issues Addressed in Admitting CIRP Petition

M/s BMSS Steel Industries Private Limited Versus M/s Forge India Private Limited

The National Company Law Tribunal, Chandigarh Bench, found that the demand notice was properly served, the operational debt was not disputed beyond 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 - time limitation - proper service of demand notice - HELD THAT:- The demand notice was delivered via speed post at the registered address of the Corporate Debtor. The original postal receipts are attached as Annexure-8 of the petition. In view of the same, it is held that the demand notice has been duly served. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is submitted in short reply by the Corporate Debtor vide Diary No.00341/01 dated 15.12.2021 that the Corporate Debtor in the e-mail dated 29.12.2018 admits the outstanding payment to the extent of principal amount only. The said e-mail has also been annexed in the main petition as Annexure A-7 at page No.25. It is also submitted by the Corporate Debtor that it is unable to pay the any of amount due and has become financially unviable. Time Limitation - HELD THAT:- The default occurred from 01.05.2019 and the petition is filed on 27.09.2019, hence the debt is not time barred and the petition is filed within the period of limitation. It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. The petitioner states that from the abovementioned facts it is clear that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is as per the threshold limit before the Notification S.O.1205(E) dated March 24, 2020 - the present petition is complete and the petitioner is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. In the backdrop of the above facts and records, the present petition is liable to admitted, in terms of Section 9(5) of IBC, 2016. Petition admitted - moratorium declared. Issues:1. Proper service of demand notice under Section 9 of IBC, 2016.2. Dispute of operational debt by the corporate debtor.3. Timeliness of the petition filing.4. Admittance of the petition and initiation of Corporate Insolvency Resolution Process.5. Declaration and implementation of moratorium.6. Appointment of Interim Resolution Professional and related directions.7. Deposit of funds for CIRP expenses.Analysis:Issue 1: Proper service of demand noticeThe petition was filed under Section 9 of IBC, 2016, with a demand notice sent to the Corporate Debtor via speed post on the registered address. The original postal receipts were attached to the petition, confirming the service. The Tribunal found the demand notice to have been duly served.Issue 2: Dispute of operational debtThe Corporate Debtor admitted the outstanding payment to the extent of the principal amount only in a short reply. The debtor claimed financial unviability and did not dispute the debt beyond the principal amount. The Tribunal noted the lack of dispute regarding the operational debt.Issue 3: Timeliness of petition filingThe default occurred on 01.05.2019, and the petition was filed on 27.09.2019, within the limitation period. The Tribunal confirmed that the debt was not time-barred, and the petition was filed within the statutory timeframe.Issue 4: Admittance of the petitionThe petitioner's claim remained uncontroverted by the Corporate Debtor, establishing a clear default in payment. The Tribunal found the petition complete and admitted it for the initiation of the Corporate Insolvency Resolution Process under Section 9(5) of IBC, 2016.Issue 5: Declaration and implementation of moratoriumConditions under Section 9 of the Code were satisfied as the Corporate Debtor failed to make the payment mentioned in the statutory notice. The Tribunal declared a moratorium, preventing suits, asset transfers, and enforcing security interests. Essential services to the debtor were to continue during this period.Issue 6: Appointment of Interim Resolution ProfessionalMr. Mohit Chawla was appointed as the Interim Resolution Professional with specific directions to manage the affairs of the Corporate Debtor. The professional was tasked with preparing an asset inventory, constituting a Committee of Creditors, and sending progress reports to the Tribunal regularly.Issue 7: Deposit of funds for CIRP expensesThe petitioner was directed to deposit funds with the Interim Resolution Professional to cover immediate expenses related to the Corporate Insolvency Resolution Process. These funds were to be reimbursed by the Committee of Creditors as part of the CIRP costs.This detailed analysis covers the key issues addressed in the judgment delivered by the National Company Law Tribunal, Chandigarh Bench, regarding the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor.