2022 (5) TMI 1200 - Tri - Insolvency and Bankruptcy

Operational Creditor's Insolvency Application Admitted: Corporate Debtor's Denial Overruled

The Tribunal admitted the Operational Creditor's application under Section 9 of the Insolvency and Bankruptcy Code, 2016, for Corporate Insolvency ... 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 note that the Operational Creditor has placed on record the demand notice along with invoices, with its Application. Once the debt is shown as due, it is for the Corporate Debtor to prove that there are no outstanding dues to be paid to the Operational Creditor. Also, no such payment has been made by the Corporate Debtor - The Applicant has filed an affidavit in compliance of Section 9(3)(b) of the Code, stating that no notice of dispute has been received by it. The present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted - application admitted - moratorium declared. Issues:1. Application under Section 9 of Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process (CIRP).2. Operational Creditor's claim of unpaid invoices against Corporate Debtor.3. Corporate Debtor's response denying liability and proposing repayment in installments.4. Dispute regarding outstanding debt and quality of products delivered.5. Legal principles regarding pre-existing disputes and conditions for admitting applications under Section 9 of the IBC.Issue 1: Application under Section 9 of IBC for CIRPThe application was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor. The Operational Creditor provided details of the debt due, the date of default, and the steps taken to recover the outstanding amount, including sending a demand notice to the Corporate Debtor.Issue 2: Operational Creditor's ClaimThe Operational Creditor, a Partnership firm engaged in manufacturing and trading, claimed that the Corporate Debtor owed a substantial amount for supplied materials, with invoices remaining partially unpaid since 30.06.2018. Despite repeated assurances from the Corporate Debtor, the full payment was not made, leading to the demand notice and subsequent application for CIRP. The Operational Creditor substantiated its claim with copies of unpaid invoices and a ledger.Issue 3: Corporate Debtor's ResponseThe Corporate Debtor responded by denying liability for the claimed amount and proposing to repay the debt in 15 equal installments starting from a specified date. The Corporate Debtor cited financial difficulties due to the pandemic but expressed willingness to settle the outstanding debt without interest. The Corporate Debtor also raised disputes regarding the invoices, product quality, and the nature of the business relationship with the Operational Creditor.Issue 4: Dispute Regarding Outstanding DebtThe Corporate Debtor disputed the amount claimed by the Operational Creditor, questioning the validity of some invoices and the accuracy of the products delivered. The Corporate Debtor highlighted issues related to product quality, pricing agreements, and the absence of formal documentation due to maintaining a positive business relationship. The Operational Creditor, in response, emphasized the unpaid invoices and the lack of dispute notice received.Issue 5: Legal Principles and Admittance of ApplicationThe judgment referenced legal principles established by the Supreme Court regarding pre-existing disputes and conditions for admitting applications under Section 9 of the IBC. The Tribunal considered the evidence presented by the Operational Creditor, including the demand notice and invoices, to establish the default in payment of operational debt. The Tribunal found the application complete, admitted it, and appointed an Interim Resolution Professional to oversee the Corporate Insolvency Resolution Process.This comprehensive analysis covers the key issues addressed in the legal judgment, detailing the claims, responses, disputes, and legal principles applied in the context of the Insolvency and Bankruptcy proceedings.