Default in Payment Leads to Insolvency Resolution Process

The Tribunal found the respondent in default of payment for supplied goods, leading to the initiation of Corporate Insolvency Resolution Process under Section 9(5) of the Insolvency and Bankruptcy Code. Ms. Ashu Gupta was appointed as the Insolvency Resolution Professional, with the applicant required to deposit Rs. 2 lacs for expenses. A moratorium period was imposed on the respondent, and compliance reports were mandated. The order was to be communicated to relevant parties and regulatory authorities, with necessary updates to official records.

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Issues:
Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process based on unpaid operational debt.

Analysis:
The application was filed by Swastik Pipe Ltd., claiming to be the operational creditor seeking initiation of Corporate Insolvency Resolution Process against the respondent company. The operational creditor had supplied C.R. Sheets to the corporate debtor and issued a Demand Notice demanding payment of Rs. 3,89,265/- as unpaid operational debt. The corporate debtor did not submit a reply but argued the matter before the Tribunal.

The Tribunal considered the details of transactions and documents provided by the applicant. Ledger Annexure A2 showed that payments were regularly made, but a significant amount of Rs. 3,89,265/- remained unpaid by the respondent. Despite contentions raised by the respondent's counsel regarding different amounts mentioned, it was established that a principal amount of Rs. 1,78,992/- and interest of Rs. 2,10,273/- were due and unpaid. The Tribunal noted that the demand notice was issued, and the corporate debtor did not dispute the default, thereby admitting to the debt.

Based on the evidence presented, the Tribunal found a default on the part of the respondent in payment of the invoices raised by the applicant, leading to the admission of the application under Section 9(5) of the Insolvency and Bankruptcy Code. Consequently, Corporate Insolvency Resolution Process (CIRP) was ordered to be initiated against the respondent without delay.

The Tribunal appointed Ms. Ashu Gupta as the Insolvency Resolution Professional (IRP) for the corporate debtor, subject to certain conditions. The applicant was directed to deposit Rs. 2 lacs with the Interim Resolution Professional to cover expenses. The moratorium period under Section 14(1) of the Code was imposed on the corporate debtor, and other relevant provisions of the Code were to be followed during this period.

Additionally, instructions were given for communication of the order to the parties involved, the IRP, and regulatory authorities. Compliance reports were to be submitted, and necessary updates were to be made to official records. The order was to be served to all parties, and the file was to be consigned to the record room.

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