Tribunal Admits CIRP Application, Appoints IRP, Imposes Moratorium to Protect Corporate Debtor

The Tribunal admitted an application for Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code 2016 against the Corporate Debtor after it admitted liability and default. Mr. Ram Phal Bhardwaj was appointed as the Interim Resolution Professional (IRP), and a moratorium was imposed to protect the Corporate Debtor from legal actions and asset transfers. Essential services supply was ensured during the moratorium period, with ongoing communication and updates required until the completion of the insolvency resolution process.

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Issues: Application for Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code 2016 due to alleged default in debt payment.

1. Operational Debt and Default Allegations:
The Applicant, M/s. Saran Equipments and Engineers Pvt. Ltd., filed an application under Section 9 of the Insolvency and Bankruptcy Code 2016 against M/s. ASPG Infrastructures Pvt. Ltd. for defaulting on a debt of Rs. 1,79,63,109, including outstanding principle and interest. The debt arose from the supply of Iron and Steel Products, with the Applicant alleging non-payment for certain invoices despite no dispute on the quality of goods supplied.

2. Response of the Corporate Debtor:
The Corporate Debtor, in its reply, claimed that the Operational Creditor was seeking payment for goods not received, alleging unethical invoicing practices. The Corporate Debtor highlighted a sound financial position and disputed the validity of the demand notice and interest charges. It also mentioned a police complaint against employees of the Operational Creditor for raising false invoices.

3. Rejoinder and Counter-Arguments:
The Operational Creditor denied the Corporate Debtor's claims, asserting that goods were delivered and disputed the Corporate Debtor's objections. It presented evidence of communication regarding goods delivery and disputed the Corporate Debtor's allegations of illegal invoicing.

4. Admission of Liability by Corporate Debtor:
During the hearing, the Corporate Debtor's counsel admitted the liability and inability to pay the claimed amount. Subsequently, the Tribunal passed an order on 13.04.2022, where the Corporate Debtor admitted the debt and default, leading to the initiation of CIRP against the Corporate Debtor.

5. Decision and Appointment of Interim Resolution Professional (IRP):
After considering the arguments and documents, the Tribunal found an operational debt due from the Corporate Debtor and admitted the application for CIRP. The Tribunal appointed Mr. Ram Phal Bhardwaj as the IRP, following the necessary procedures and declarations as per the Insolvency and Bankruptcy Code.

6. Imposition of Moratorium and Further Directions:
The Tribunal imposed a moratorium on various actions against the Corporate Debtor, including legal proceedings and asset transfers. Essential services supply was protected during the moratorium period. The order directed communication to relevant parties and updates on the Corporate Debtor's status. The moratorium would remain in effect until the completion of the corporate insolvency resolution process.

This detailed analysis covers the issues involved in the legal judgment regarding the application for CIRP under the Insolvency and Bankruptcy Code 2016, highlighting the contentions, responses, admission of liability, appointment of IRP, and imposition of a moratorium for the Corporate Debtor.

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