2022 (7) TMI 1067 - Tri - Insolvency and Bankruptcy

Operational Creditor's Petition Admitted: Corporate Insolvency Resolution Process Initiated

Vasthi Trading Pvt. Ltd. Versus Farmax India Ltd.

The petition under Section 9 of the Insolvency and Bankruptcy Code was admitted, leading to the initiation of Corporate Insolvency Resolution Process ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- A perusal of counter filed by Corporate Debtor shows that, the Corporate Debtor has not disputed the debt and only disputed the quantum of the debt. As per Section 5(6) of the code, dispute if any as to debt, shall be regarding existence of debt - In the case in hand, the existence of debt is not disputed, as according to corporate debtor, the quantum of debt alone is in dispute. Hence, the operational debt in this case remain undisputed stands admitted and established. Since, it is not the case of corporate debtor that it discharged the said debt, the default also stands established. This Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code - Application admitted - moratorium declared. Issues involved:1. Admission of petition under Section 9 of the Insolvency and Bankruptcy Code.2. Determination of operational debt and default in payment by the Corporate Debtor.Detailed analysis:1. The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, seeking admission, initiation of Corporate Insolvency Resolution Process (CIRP), moratorium, and appointment of an Interim Resolution Professional. The Operational Creditor alleged that the Corporate Debtor defaulted in payment of a debt amounting to Rs. 1,05,23,214. The Operational Creditor supplied unbranded rawa to the Corporate Debtor on credit and issued a demand notice when repayment was not made. The Corporate Debtor partly denied the debt amount, citing financial crises and unsuccessful settlement negotiations.2. The key issue for consideration was whether there existed an operational debt due and payable by the Corporate Debtor and if the Corporate Debtor defaulted in payment. The Corporate Debtor did not dispute the existence of the debt but contested the quantum of the debt. As per Section 5(6) of the Code, a dispute regarding debt should pertain to its existence. In this case, the debt's existence was not disputed, only the amount. Thus, the operational debt was considered undisputed and established, with the default also being confirmed since the Corporate Debtor did not discharge the debt.3. Consequently, the Adjudicating Authority admitted the petition under Section 9 of the IBC, declaring a moratorium as per Section 14 of the Code. Various directions were issued, including admission of the Corporate Debtor into the Corporate Insolvency Resolution Process, prohibition of legal actions against the Corporate Debtor, continuation of essential supplies, and appointment of an Interim Resolution Professional. The order of moratorium was to be in effect until the completion of the resolution process or liquidation, whichever occurred earlier.4. Additionally, the Tribunal appointed a specific individual as the Interim Resolution Professional, ensuring compliance with relevant regulations. The petitioner was directed to pay a specified sum to the Interim Resolution Professional for expenses, subject to adjustment by the Committee of Creditors. The petition was ultimately admitted, and the registry was instructed to communicate the order to the relevant parties, including the IBBI and the appointed IRP for the CIRP.