2022 (4) TMI 257 - Tri - Insolvency and Bankruptcy

Tribunal grants application against Corporate Debtor for unpaid services

The Tribunal admitted the application under section 9 of the Insolvency and Bankruptcy Code, 2016, filed by the Operational Creditor against the Corporate ... Corporate insolvency application under section 9 of IBC, 2016 - existence of operational debt and default - limitation and acknowledgement restarting limitation - service of application and maintainability - appointment of Interim Resolution Professional - deposit for IRP expenses - interim moratorium under section 14Corporate insolvency application under section 9 of IBC, 2016 - existence of operational debt and default - The section 9 application against the corporate debtor was maintainable and admitted on the ground of established operational debt and default. - HELD THAT: - The Tribunal found that the applicant and the corporate debtor had entered into a contract for advertising services and that the corporate debtor had not paid the sum reflected in the confirmation of accounts. The operational creditor filed the application under section 9 and furnished the required affidavit under section 9(3)(b). The corporate debtor did not file a reply or appear and was proceeded with ex parte. On the material on record the Tribunal concluded that the debt remained uncontroverted and that default in payment was established. [Paras 2, 3, 6, 8, 10]Application under section 9 is admitted as the operational debt and default are established.Limitation and acknowledgement restarting limitation - The claim was held not to be time-barred in view of an acknowledgement of debt after the date of default. - HELD THAT: - Although the date of default as per Form V was earlier, the Tribunal noted that the corporate debtor, through its director, had acknowledged the debt in the confirmation of accounts dated 01.04.2019. On that basis the Tribunal held that the debt was not barred by limitation and that the section 9 application was filed within the permissible period. [Paras 3, 7]Limitation objection is negatived; the application is within time on account of the post-default acknowledgement.Service of application and maintainability - Service of the section 9 application on the corporate debtor was valid and the Tribunal had jurisdiction to entertain the application. - HELD THAT: - The Tribunal recorded service by email to the registered email on the MCA website and by speed post to the registered office address, with delivery confirmed. The registered office being in Delhi, the Tribunal held that it had territorial jurisdiction to try the application and that the application was properly before it. [Paras 5, 9]Service was valid and the Tribunal has jurisdiction to entertain the application.Appointment of Interim Resolution Professional - An Interim Resolution Professional was appointed by the Tribunal because the operational creditor did not propose a name. - HELD THAT: - The operational creditor had not proposed an IRP in the prescribed part of the application. The Tribunal therefore appointed Ms. Gunjan Mittal as Interim Resolution Professional, subject to the conditions that no disciplinary proceedings be pending and that statutory disclosures and consent in Form 2 be filed, as required under the Code and Regulations. [Paras 11]Ms. Gunjan Mittal is appointed as Interim Resolution Professional subject to statutory conditions.Deposit for IRP expenses - The operational creditor was directed to deposit an amount to meet IRP expenses, recoverable subject to adjustment by the Committee of Creditors. - HELD THAT: - To enable the IRP to perform statutory functions, the Tribunal directed the operational creditor to deposit a sum with the IRP within one week of receipt of the order. The Tribunal clarified that the amount will be accounted for by the IRP and is subject to adjustment by the Committee of Creditors and refundable as per accounts. [Paras 12]Operational creditor to deposit the directed sum with the IRP within one week, subject to subsequent adjustment.Interim moratorium under section 14 - On admission, the moratorium under section 14(1) of the IBC is applicable to the corporate debtor. - HELD THAT: - Consequent upon admission of the section 9 application under section 9(5), the Tribunal applied the moratorium envisaged by section 14(1), with the provisos (a) to (d) operating, and directed that the relevant provisions of sections 14(2) to 14(4) will apply during the moratorium period in accordance with the Code. [Paras 13]Moratorium under section 14 is declared as a consequence of admission of the CIRP.Final Conclusion: The Tribunal admitted the section 9 corporate insolvency application against the corporate debtor on the ground of an established operational debt and default, held the claim not time barred in view of a post-default acknowledgement, validated service and jurisdiction, proceeded ex parte against the corporate debtor, appointed an Interim Resolution Professional subject to statutory conditions, directed an interim deposit to meet IRP expenses, and declared the moratorium under section 14 consequent to admission. Issues:1. Application under section 9 of Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency process.2. Unpaid debt by Corporate Debtor to Operational Creditor for Advertising Services.3. Failure of Corporate Debtor to pay outstanding amount leading to application under IBC, 2016.4. Ex-parte proceedings due to non-appearance of Corporate Debtor.5. Jurisdiction of the Tribunal to entertain the application.6. Appointment of Interim Resolution Professional.7. Direction for deposit by Operational Creditor with the Interim Resolution Professional.8. Implementation of moratorium under Section 14 of the IBC, 2016.Analysis:1. The application was filed under section 9 of the Insolvency and Bankruptcy Code, 2016 by the Operational Creditor to initiate the Corporate Insolvency process against the Corporate Debtor, who failed to pay an outstanding amount of Rs. 40,77,417 for Advertising Services provided as per the contract.2. The Operational Creditor highlighted that despite completing the work as agreed upon within the stipulated time, the Corporate Debtor did not pay the due amount. The debt was acknowledged by the Corporate Debtor's Director in the confirmation of accounts, and a demand notice was issued under the I & B Code, 2016, which the Corporate Debtor failed to respond to with any evidence of a preexisting dispute.3. The Tribunal proceeded ex-parte against the Corporate Debtor as they neither filed a reply nor appeared before the Bench. The Tribunal found the application valid as the debt was not time-barred, and the Operational Creditor had followed due process in serving the application and notices to the Corporate Debtor.4. With the jurisdiction established, the Tribunal admitted the application, noting the uncontested default by the Corporate Debtor in payment. An Interim Resolution Professional was appointed, and the Operational Creditor was directed to deposit a sum with the IRP to cover expenses, subject to adjustment by the Committee of Creditors.5. The admission of the application triggered a moratorium under Section 14 of the IBC, 2016, prohibiting certain actions against the Corporate Debtor. The Tribunal directed communication of the order to all relevant parties and authorities for compliance and record-keeping purposes, ensuring the due process and legal requirements are met in the insolvency proceedings.