2022 (3) TMI 1223 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process Initiated under Section 9: Moratorium Declared

The Tribunal admitted the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution ... 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:- In view of the correspondence between the Operational Creditor and the Corporate Debtor, the outstanding liability has been clearly admitted by the Corporate Debtor and there is no plausible defence available to the Corporate Debtor. The Corporate Debtor has committed default in making payment of admitted operational debt and in spite of repeated requests and demands for more than 4 years now. They have not been able to clear their liability may be due to financial crises or otherwise, but the fact remains that the default has occurred in repayment of operational debt. The petition is otherwise complete in all respects. The application filed by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, is hereby admitted - moratorium declared. Issues Involved:Initiation of corporate insolvency resolution process under Insolvency and Bankruptcy Code, 2016 based on operational debt non-payment.Detailed Analysis:Issue 1: Filing of Petition for Insolvency Resolution ProcessThe petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Operational Creditor against the Corporate Debtor for non-payment of operational debt. The Operational Creditor provided services to the Corporate Debtor as per a service agreement, leading to an outstanding amount of Rs. 4,93,217. Despite repeated requests and demand notices, the Corporate Debtor failed to make payments, resulting in the petition for insolvency resolution.Issue 2: Response of Corporate DebtorThe Corporate Debtor, in its reply affidavit, admitted the outstanding amount but cited financial crises as the reason for non-payment. The Corporate Debtor requested time for payment, acknowledging the service agreement but claiming unexpected termination by the Operational Creditor due to unpaid bills. The Corporate Debtor sought understanding and time for repayment, emphasizing efforts to arrange the due amount.Issue 3: Admittance of LiabilityThe Corporate Debtor's correspondence, including letters admitting the outstanding liability and requesting time for payment, was presented as evidence of the admitted default in payment. Despite the Corporate Debtor's explanations regarding financial difficulties, the Tribunal found no plausible defense against the admitted operational debt default, persisting for over four years.Issue 4: Tribunal's DecisionAfter reviewing the pleadings and documents, the Tribunal deemed it a fit case for admission of the petition. Consequently, the Tribunal admitted the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. The Tribunal declared a moratorium, ordered a public announcement, and appointed an Interim Resolution Professional for further proceedings.In conclusion, the Tribunal's decision to admit the petition for insolvency resolution was based on the clear admission of liability by the Corporate Debtor and the absence of a plausible defense. The detailed analysis of the issues involved and the subsequent orders issued by the Tribunal ensure the initiation of the resolution process in accordance with the Insolvency and Bankruptcy Code, 2016.