Tribunal Admits Petition & Appoints IRP, Rejects Section 10A Application

The Tribunal admitted the petition under Section 9(5) of IBC, 2016, and appointed an Interim Resolution Professional. A moratorium was declared, and the Operational Creditor was directed to pay expenses to the IRP. The court found that Section 10A of IBC, 2016 was not applicable due to the timing of the defaults. The existence of a pre-existing dispute was rejected, and the CIRP was initiated for the Corporate Debtor.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Default in payment by Corporate Debtor
3. Applicability of Section 10A of IBC, 2016
4. Existence of pre-existing dispute

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The application IBA/696/2020 was filed by My Box Technologies Private Limited under Section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016) against Multicity Digital Consortium Private Limited. The Operational Creditor sought to admit the application, initiate the CIRP, declare a moratorium, and appoint an Interim Resolution Professional (IRP). The Tribunal noted that the Operational Creditor is a Private Limited Company and the Corporate Debtor is also a Private Limited Company with specified corporate identification and registered office details.

2. Default in payment by Corporate Debtor:
The Operational Creditor claimed an outstanding debt of Rs. 1,67,33,866/- from the Corporate Debtor, with the last date of default being 31.02.2019. The debt arose from a Supply Agreement dated 28.05.2018 and subsequent purchase orders for Set Top Boxes (STBs). The payment terms were specified as 40% advance, 10% at the end of 30th day, 10% at the end of 60th day, and the remaining 40% at the end of 90th day from the supply of STBs. The Corporate Debtor failed to make the agreed payments, leading to multiple demand emails from the Operational Creditor and eventually a Demand Notice dated 13.04.2020.

3. Applicability of Section 10A of IBC, 2016:
The Corporate Debtor argued that the application was hit by Section 10A of IBC, 2016, which suspends initiation of CIRP for defaults arising on or after 25th March 2020 due to the COVID-19 pandemic. However, the Tribunal found that the invoices in question were raised before this date, and the payment defaults occurred before 25th March 2020. Thus, Section 10A was not applicable to this case.

4. Existence of pre-existing dispute:
The Corporate Debtor claimed a pre-existing dispute, citing a complaint letter dated 13.03.2020 about errors in the STBs. However, the Tribunal noted that in emails dated 25.02.2020, the Corporate Debtor acknowledged its liability and proposed a payment schedule without mentioning any dispute. The Tribunal referred to the Supreme Court's observation in Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd., which held that the adjudicating authority must reject spurious defenses and only consider genuine disputes. The Tribunal concluded that there was no pre-existing dispute in this case.

Conclusion:
The Tribunal admitted the petition under Section 9(5) of IBC, 2016, and appointed Ms. Kavitha Surana as the Interim Resolution Professional. A moratorium was declared, prohibiting suits, transferring of assets, and recovery actions against the Corporate Debtor. The Operational Creditor was directed to pay Rs. 1,00,000/- to the IRP for expenses. The order was communicated to relevant parties and authorities, initiating the CIRP for the Corporate Debtor.

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