Tribunal admits application under I.B. Code for Corporate Debtor insolvency

The Tribunal found sufficient evidence of the Corporate Debtor's default in paying operational debt exceeding one crore rupees. Consequently, the application under Section 9 of the I.B. Code was allowed, admitting the Corporate Debtor into Corporate Insolvency Resolution Process. A moratorium under Section 14 of the I.B. Code was declared, appointing an Interim Resolution Professional to manage operations, protect assets, and call for claims submission. The IRP was tasked with ensuring continuity of goods/services supply during the moratorium, with the Operational Creditor directed to provide an advance amount for the resolution process. The application was admitted, and necessary steps were taken to proceed with the resolution process.

---

---

Issues:
Application under Section 9 of I.B. Code for Corporate Insolvency Resolution Process due to default in paying operational debt.

Analysis:
The application was filed by the Operational Creditor against the Corporate Debtor for defaulting on operational debt amounting to Rs. 3,24,12,207. The Operational Creditor had supplied goods to the Corporate Debtor, who failed to make the payment despite admitting the outstanding amount in an email. The Corporate Debtor raised technical defenses, including disputes about the quality of goods supplied and unauthorized notice under Section 8 of the I.B. Code. However, the evidence presented, such as certificates of debt, invoices, and the demand notice, supported the Operational Creditor's claim of default.

The Corporate Debtor contested the application, claiming no amount was due and alleging a pre-existing dispute without providing substantial evidence. Despite previous statements seeking time to settle the dispute, the Corporate Debtor failed to present a strong defense against the default allegations. The notice under Section 8 of the I.B. Code was sent by a validly authorized Insolvency Professional on behalf of the Operational Creditor, strengthening the case for default by the Corporate Debtor.

The Tribunal found sufficient evidence on record to establish the Corporate Debtor's default in paying operational debt exceeding one crore rupees. As a result, the application was allowed, admitting the Corporate Debtor into Corporate Insolvency Resolution Process. The Tribunal declared a moratorium under Section 14 of the I.B. Code, prohibiting various actions against the Corporate Debtor, and appointed an Interim Resolution Professional to oversee the resolution process. The IRP was directed to manage the operations of the Corporate Debtor, protect its assets, and call for submission of claims as required by the Code.

Additionally, the IRP was instructed to make a public announcement of the CIRP initiation, ensuring the continuity of goods/services supply to the Corporate Debtor during the moratorium period. The Operational Creditor was directed to provide an advance amount for the smooth conduct of the resolution process. The Registry was tasked with communicating the order to all relevant parties and uploading it on the website. Ultimately, the application was admitted, and necessary steps were taken to proceed with the Corporate Insolvency Resolution Process.

---