2022 (4) TMI 80 - Tri - Insolvency and Bankruptcy

Tribunal Admits Company Petition under Insolvency Code Section 9: Corporate Debtor Faces CIRP

The Tribunal admitted the Company Petition under section 9 of the Insolvency and Bankruptcy Code, 2016, filed by an Operational Creditor against a ... 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 pertinent to mention that on receiving a statutory notice in FORM 3, the Corporate Debtor neither disputed the services provided by the Operational Creditor nor denied the fact that there are any outstanding dues. Nevertheless, they themselves in their letter dated 24.05.2019 admitted that they are willing to settle the matter and clear the dues - Further, it is apparent from the record that the Ld. Counsel appearing on behalf of the Corporate Debtor last appeared on 13.02.2020 and undertook to file vakalatnama and affidavit-in-reply. However, none appeared on behalf of the Corporate Debtor since then. Neither any reply has been filed by the Corporate Debtor even after receiving Court Notices. The matter was set ex-parte on 30.11.2021. The present petition made by the Operational Creditor is complete in all respect as required by law. The petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4(1) of the Code, i.e., Rupees one lakh, at the relevant time, and since there is no preexisting dispute, there is no defence available to the Corporate Debtor in these circumstances - Petition admitted - moratorium declared. Issues:1. Company Petition under section 9 of the Insolvency and Bankruptcy Code, 2016.2. Failure of Corporate Debtor to make payment leading to Corporate Insolvency Resolution Process (CIRP).3. Dispute over outstanding dues between Operational Creditor and Corporate Debtor.4. Admittance of default by Corporate Debtor but failure to settle dues.5. Legal procedures and orders for initiating CIRP and appointing Interim Resolution Professional.Issue 1: Company Petition under section 9 of the Insolvency and Bankruptcy Code, 2016The Tribunal, in response to a Company Petition filed under section 9 of the Insolvency and Bankruptcy Code, 2016, by an Operational Creditor against a Corporate Debtor, examined the grounds of the petition. The petition highlighted the failure of the Corporate Debtor to make a payment of a significant sum, leading to the initiation of the Corporate Insolvency Resolution Process (CIRP). The Operational Creditor provided detailed evidence of invoices issued, notices sent, and the subsequent lack of payment from the Corporate Debtor.Issue 2: Failure of Corporate Debtor to make payment leading to Corporate Insolvency Resolution Process (CIRP)The Tribunal noted that the Corporate Debtor had failed to make a payment of a substantial amount, as evidenced by invoices and notices provided by the Operational Creditor. Despite the Corporate Debtor acknowledging the outstanding dues and expressing willingness to settle the matter, no concrete steps were taken to clear the debts. The Tribunal found the petition to be complete in all legal aspects, establishing the default by the Corporate Debtor, exceeding the minimum amount stipulated under the Code.Issue 3: Dispute over outstanding dues between Operational Creditor and Corporate DebtorThe Tribunal observed that the Corporate Debtor did not dispute the services provided by the Operational Creditor or deny the existence of outstanding dues. Despite admitting their willingness to settle the dues, the Corporate Debtor failed to take any substantial action towards resolving the matter. The lack of response or appearance by the Corporate Debtor in subsequent proceedings further solidified the Operational Creditor's claim regarding the default in payment.Issue 4: Admittance of default by Corporate Debtor but failure to settle duesThe Tribunal highlighted the admission of default by the Corporate Debtor in their communication with the Operational Creditor. However, the lack of proactive measures to clear the dues, coupled with the absence of any response or appearance in the legal proceedings, indicated a significant lapse on the part of the Corporate Debtor. This non-compliance and inaction further supported the Tribunal's decision to admit the Company Petition and initiate the CIRP against the Corporate Debtor.Issue 5: Legal procedures and orders for initiating CIRP and appointing Interim Resolution ProfessionalIn its final orders, the Tribunal admitted the Company Petition, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. The Tribunal imposed a moratorium under section 14 of the IBC, appointed an Interim Resolution Professional (IRP), and directed the management of the Corporate Debtor to vest in the IRP during the CIRP period. Various procedural requirements, including public announcements, progress reports, and financial deposits, were outlined to ensure the smooth progress of the resolution process.---