2022 (7) TMI 313 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application, Appoints Interim Resolution Professional

Mahavir Industrial Corporation Versus M/s Hindustan Controls & Equipment Pvt. Ltd.

The tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, finding the Operational Creditor had proven its case. A ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- In the present case, it is clear from the facts that the Corporate Debtor had admitted its liability and had agreed to pay Rs.1,00,000/- per month for 42 months in the proceeding filed before the Hon’ble High Court of Calcutta. The Corporate Debtor, however failed and committed default in payment of the instalments - Even in the reply to the notice under section 8 of Code served on the Corporate Debtor by the Operational Creditor, the Corporate Debtor could not give any notice relating to any dispute as regards the unpaid debt or any suit having been filed or Arbitration Proceedings regarding the said claim of the Operational Creditor. Time Limitation - HELD THAT:- Since the Corporate Debtor had sought orders from the Hon’ble High Court for making repayment of the loan which was passed on 21st November, 2016, and the present petition having been filed on 19th July, 2019, this petition is very much within time. Thus, the Operational Creditor has proved its case without any doubt - Since the petition is otherwise complete in all respects, petition is admitted - moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016.2. Admissibility of the application due to the Operational Creditor being an unregistered partnership firm.3. Allegations of forum shopping by the Operational Creditor.4. Compliance with the requirements of Sections 9(3)(b) and 9(3)(c) of the Insolvency and Bankruptcy Code, 2016.5. The claim being barred by the law of limitation.6. Admission of debt by the Corporate Debtor.Issue-wise Detailed Analysis:1. Initiation of CIRP under Section 9 of the Insolvency and Bankruptcy Code, 2016:The Operational Creditor filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The petition was based on the debt arising from the supply of electrical and mechanical goods during 2010-2011, for which invoices were raised and remained unpaid.2. Admissibility of the application due to the Operational Creditor being an unregistered partnership firm:The Corporate Debtor argued that the application was not maintainable as the Operational Creditor was an unregistered partnership firm, and the other partners were not arrayed as parties in the petition. However, the tribunal found that the Operational Creditor had filed a Power of Attorney and affidavits through its partner, Hanuman Prasad Chharia, fulfilling the necessary legal requirements.3. Allegations of forum shopping by the Operational Creditor:The Corporate Debtor accused the Operational Creditor of forum shopping by initiating multiple proceedings based on the same cause of action. The tribunal rejected this argument, noting that the Operational Creditor had pursued legal remedies in a sequential manner, and the proceedings before the Hon'ble High Court at Calcutta were related to the same debt but did not preclude the current application under the Insolvency and Bankruptcy Code, 2016.4. Compliance with the requirements of Sections 9(3)(b) and 9(3)(c) of the Insolvency and Bankruptcy Code, 2016:The Corporate Debtor contended that the application was incomplete as it did not include a certificate from the financial institution maintaining the Operational Creditor's accounts. The tribunal, however, found that the Operational Creditor had filed the necessary affidavits and bank statements proving the unpaid debt, thereby satisfying the requirements of Sections 9(3)(b) and 9(3)(c).5. The claim being barred by the law of limitation:The Corporate Debtor argued that the claim was barred by limitation as the invoices were raised in 2011-2012. The tribunal noted that the Hon'ble High Court at Calcutta had extended the time for payment in its order dated 21st November 2016, and the present petition was filed within the limitation period from that date.6. Admission of debt by the Corporate Debtor:The tribunal observed that the Corporate Debtor had admitted its liability and agreed to pay Rs. 1,00,000 per month for 42 months in the proceedings before the Hon'ble High Court at Calcutta. Despite this admission, the Corporate Debtor defaulted on the payments, leading to the initiation of the current proceedings.Judgment:The tribunal found that the Operational Creditor had proved its case without any doubt and that the petition was complete in all respects. Consequently, the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, was admitted. A moratorium was declared, and Mr. Subodh Kumar Agrawal was appointed as the Interim Resolution Professional (IRP). The tribunal directed the IRP to convene a meeting of the Committee of Creditors and submit a resolution plan within 105 days from the insolvency commencement date. The Operational Creditor was directed to deposit Rs. 2,00,000 with the IRP for preliminary expenses and fees. The matter was listed for filing a progress report on 22/08/2022.