Tribunal Admits Creditor's CIRP Application Against Debtor for Payment Default

The Tribunal admitted the Operational Creditor's application for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on the established default in payment for printing inks supplied. An Insolvency Resolution Professional (IRP) was appointed, and the Operational Creditor was directed to deposit funds for expenses. A moratorium was imposed on the Corporate Debtor, with necessary provisions coming into effect. The Registry was instructed to notify relevant parties, and compliance measures were outlined for the Operational Creditor and Registrar of NCLT.

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Issues:
Application for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of IBC 2016 based on alleged default by the Corporate Debtor in payment for printing inks supplied by the Operational Creditor.

Analysis:
The application was filed by the Operational Creditor, who is the sole proprietor of M/s. Gem International, seeking to initiate CIRP against the Corporate Debtor, M/s. Aar Vee Printers Private Limited, for an outstanding balance of Rs. 6,16,972 on account of supplying printing inks. The Operational Creditor detailed the transactions, including raising twenty-two invoices between April 2013 to August 2014, with partial payments received and subsequent default by the Corporate Debtor. The Operational Creditor also highlighted a bounced cheque issued by the Corporate Debtor towards the outstanding payment, indicating admission of debt.

Despite opportunities provided, the Respondent (Corporate Debtor) did not file a reply, leading to an ex-parte proceeding. The Tribunal acknowledged the bounced cheque as evidence of the debt admission by the Corporate Debtor, establishing the default in payment of operational debt to the Operational Creditor. Consequently, the Tribunal admitted the application based on the established claim by the Operational Creditor.

The Tribunal appointed an Insolvency Resolution Professional (IRP), Mr. Hans Raj Bhogra, for the Corporate Debtor, subject to certain conditions. The Operational Creditor was directed to deposit Rs. 2 lakhs with the IRP to cover expenses, with adjustments to be made by the Committee of Creditors. The moratorium under Section 14(1) of the Code was imposed on the Corporate Debtor upon admission of the application, with corresponding provisions from Section 14(2) to 14(4) coming into effect during the moratorium period.

The Registry was instructed to communicate the order to the parties involved, including the IRP, and forward a copy to IBBI for records. The Operational Creditor was directed to provide a complete paper book to the IRP, and the ROC was tasked with updating the Master Data and sending a compliance report to the Registrar, NCLT.

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