Tribunal admits insolvency application, moratorium declared, progress report set for August.

The tribunal admitted the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, initiating Corporate Insolvency Resolution Process against the Corporate Debtor. A moratorium was declared, appointing an Interim Resolution Professional and prohibiting certain actions. The Operational Creditor was directed to deposit a specified amount with the IRP, and essential supplies to the Corporate Debtor were to continue uninterrupted. The matter was scheduled for a progress report on 26/08/2022.

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Issues Involved:
1. Existence of debt and default by the Corporate Debtor.
2. Allegations of inferior quality goods supplied by the Operational Creditor.
3. Admission of liability by the Corporate Debtor.
4. Initiation of Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis:

1. Existence of Debt and Default by the Corporate Debtor:
The Operational Creditor, Unitech Paper Mills Private Limited, supplied Kraft Paper to the Corporate Debtor, Kumar Propack Private Limited, under two invoices dated 19.01.2018 and 03.02.2018. The total amount due was Rs.6,58,733/-, which remained unpaid despite repeated requests. The Operational Creditor issued a demand notice on 31.08.2019 under the Insolvency and Bankruptcy Code, 2016, which was received by the Corporate Debtor on 13.09.2019. The Corporate Debtor failed to pay the outstanding amount or raise any pre-existing dispute before the receipt of the notice.

2. Allegations of Inferior Quality Goods Supplied by the Operational Creditor:
The Corporate Debtor claimed that the Kraft Paper supplied was of inferior quality, which led to complaints from its clients and subsequent business losses. The Corporate Debtor alleged that the Operational Creditor had acknowledged the inferior quality and agreed to provide a discount. However, the Operational Creditor refuted these claims, stating that the goods were utilized by the Corporate Debtor, and no quality issues were raised prior to consumption.

3. Admission of Liability by the Corporate Debtor:
Despite the allegations, the Corporate Debtor admitted liability but contended that only Rs.2,00,000/- was payable instead of the claimed Rs.8,66,234/-. The Operational Creditor argued that the Corporate Debtor's acceptance and utilization of the goods negated any claims of inferior quality. The tribunal noted that the Corporate Debtor acknowledged its liability but attempted to unilaterally reduce the payable amount after consuming the goods, which was not permissible under the Contract Act.

4. Initiation of Corporate Insolvency Resolution Process (CIRP):
The tribunal found the petition complete in all respects and admitted the application for initiating CIRP against the Corporate Debtor. A moratorium was declared in accordance with Sections 13 and 15 of the Insolvency and Bankruptcy Code, 2016, prohibiting actions such as the institution of suits, transferring assets, and recovery of property during the moratorium period. Ms. Rashmi Agarwalla was appointed as the Interim Resolution Professional (IRP) to oversee the process and convene a Committee of Creditors.

Orders Passed:
i) The application under Section 9 of the Insolvency & Bankruptcy Code, 2016, was admitted.
ii) A moratorium was declared as per Sections 13 and 15 of the I&B Code, 2016.
iii) The IRP was directed to make a public announcement and call for claims.
iv) The moratorium prohibits the institution of suits, transferring assets, and recovery of property.
v) Supply of essential goods or services to the Corporate Debtor shall not be interrupted.
vi) The moratorium shall last until the completion of the CIRP or approval of a resolution plan.
vii) Ms. Rashmi Agarwalla was appointed as the IRP.
viii) The Operational Creditor was directed to deposit Rs.1,00,000/- with the IRP.

The tribunal directed the registry to communicate the order to all concerned parties and scheduled the matter for a progress report on 26/08/2022.

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