Tribunal approves CIRP application, appoints IRP under Insolvency and Bankruptcy Code

The Tribunal allowed the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, admitting the Corporate Debtor to Corporate Insolvency Resolution Process (CIRP). An Interim Resolution Professional was appointed, and a moratorium was declared under Section 14(1) of the Code. The IRP was tasked with managing the operations of the Corporate Debtor as a going concern. The Operational Creditor was directed to pay an advance for the CIRP process. The decision was communicated to relevant parties and uploaded on the website.

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Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by Operational Creditor against Corporate Debtor for default in payment.
2. Dispute regarding authorization of the person filing the application on behalf of the Operational Creditor.
3. Pre-existing dispute between Operational Creditor and Corporate Debtor about the quality of goods supplied.

Issue 1: Application under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The Operational Creditor filed an application against the Corporate Debtor for defaulting on an operational debt of Rs. 2,13,69,379. The Operational Creditor supplied goods to the Corporate Debtor and issued invoices from 06.09.2018 to 21.07.2020, which remained unpaid despite repeated demands and a demand notice under Section 8 of the Code.

Issue 2: Dispute regarding authorization of the person filing the application:
The Corporate Debtor contested the application, claiming that the person filing on behalf of the Operational Creditor was not authorized due to ongoing disputes among shareholders/directors. However, the Tribunal found that the person, holding 50% shares and authorized signatory, had the right to file the application, as no evidence showed the withdrawal of his authority.

Issue 3: Pre-existing dispute about the quality of goods supplied:
The Corporate Debtor argued a pre-existing dispute about the quality of goods supplied, supported by emails. However, the Tribunal analyzed the evidence and emails, concluding that no substantial dispute existed regarding the quality of goods supplied. The Operational Creditor established the debt was due and payable, and the Corporate Debtor's failure to pay constituted a default.

Judgment:
The Tribunal allowed the application, admitting the Corporate Debtor to Corporate Insolvency Resolution Process (CIRP). An Interim Resolution Professional was appointed, and a moratorium was declared under Section 14(1) of the Code. The IRP was directed to manage the operations of the Corporate Debtor as a going concern. The Operational Creditor was instructed to pay an advance to the IRP for the CIRP process. The Registry was directed to communicate the order to relevant parties and upload it on the website.

This detailed analysis covers the issues raised in the legal judgment before the National Company Law Tribunal, Ahmedabad Bench, regarding the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, and the disputes related to authorization and quality of goods supplied between the Operational Creditor and the Corporate Debtor.

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