Corporate Debtor Default Leads to Insolvency Process with Admitted Petition and Moratorium

The Tribunal found the Corporate Debtor to be in default of a debt due and payable, exceeding the stipulated threshold under the Insolvency and Bankruptcy Code. The petition to initiate Corporate Insolvency Resolution Process (CIRP) was admitted, and a moratorium was declared. An Interim Resolution Professional was appointed, and the Operational Creditor was directed to deposit funds for expenses. The Tribunal determined that the Corporate Debtor's claims were unsubstantiated, upheld the validity of the demand notice, and asserted jurisdiction based on the threshold at the time of filing.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Validity of debt and default claimed by the Operational Creditor.
3. Alleged agreement between Corporate Debtor and a third party (Raymond Group) affecting payment obligations.
4. Validity of demand notice and procedural compliance.
5. Jurisdiction and pecuniary threshold under the Code.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed under section 9 of the Insolvency and Bankruptcy Code, 2016 by the Operational Creditor seeking to initiate CIRP against the Corporate Debtor. The Tribunal found that the Corporate Debtor is in default of a debt due and payable, and the default amount surpasses the stipulated threshold under section 4(1) of the Code, which was Rupees one lakh at the relevant time. The petition was filed within the limitation period and was complete in all respects.

2. Validity of Debt and Default Claimed by the Operational Creditor:
The Operational Creditor claimed a total debt amount of Rs. 12,97,959/- due from the Corporate Debtor, consisting of a principal amount and an interest component. The Corporate Debtor acknowledged receiving the goods without any dispute and admitted to the pending payment in an email dated 24 May 2019. The Tribunal found this email to be an acknowledgment and admission of the debt by the Corporate Debtor.

3. Alleged Agreement Between Corporate Debtor and Raymond Group:
The Corporate Debtor contended that the payment to the Operational Creditor was contingent upon receiving payment from Raymond Group. However, the Tribunal found no evidence of such an agreement in the emails or the FIR filed by a person claiming to be the Authorized Officer of the Operational Creditor. The Tribunal concluded that the Corporate Debtor's claim was not substantiated and therefore not maintainable.

4. Validity of Demand Notice and Procedural Compliance:
The Corporate Debtor argued that the demand notice was void and illegal due to various procedural defects, including not being signed by the concerned person and not being sent in the correct form. The Tribunal found that the demand notice was in compliance with Rule 5 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016, and therefore, the Corporate Debtor's contention was not maintainable.

5. Jurisdiction and Pecuniary Threshold Under the Code:
The Corporate Debtor argued that the Tribunal lacked pecuniary jurisdiction as the alleged default was less than Rupees One Crore. The Tribunal noted that the petition was filed before the amendment to section 4(1) of the Code, which increased the threshold to Rupees One Crore. At the time of filing, the threshold was Rupees one lakh, and the debt amount exceeded this threshold. Hence, the Tribunal had jurisdiction to adjudicate the matter.

Conclusion:
The Tribunal was satisfied that the Corporate Debtor defaulted in its payment of dues to the Operational Creditor. The petition was admitted, and a moratorium under section 14 of the IBC was declared. Mr. Pankaj Lunawat was appointed as the Interim Resolution Professional (IRP) to carry out the functions as per the Code. The Operational Creditor was directed to deposit a sum of Rs. 2,00,000/- with the IRP for expenses arising out of issuing public notice and inviting claims. The Tribunal ordered the necessary communications and compliance reports to be issued and scheduled a follow-up hearing for reporting progress.

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