Tribunal admits insolvency application, appoints IRP under Section 9 of Insolvency and Bankruptcy Code

The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, finding the Corporate Debtor in default of the operational debt with no pre-existing dispute. An Interim Resolution Professional (IRP) was appointed to manage the Corporate Debtor's affairs, invoking a moratorium as per the IBC provisions. The application was deemed maintainable, and the Corporate Insolvency Resolution Process (CIRP) was initiated.

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Issues Involved:

1. Maintainability of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC).
2. Existence of operational debt and default.
3. Existence of a pre-existing dispute.
4. Appointment of Interim Resolution Professional (IRP).

Issue-wise Detailed Analysis:

1. Maintainability of the application under Section 9 of IBC:

The application was filed by the Operational Creditor, a proprietor of a trading firm, to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for an alleged default on an operational debt amounting to Rs. 1,01,99,509/-. The Corporate Debtor challenged the maintainability, alleging that the Applicant did not approach the Tribunal with clean hands and that the application was based on falsehood and suppression of material facts. However, the Adjudicating Authority found that the application was filed within the prescribed period of limitation and had jurisdiction to entertain the application since the registered office of the Corporate Debtor was situated in Jodhpur, Rajasthan.

2. Existence of operational debt and default:

The Applicant supplied Pet Coke, Steam Coal, and other minerals to the Corporate Debtor from 02.04.2021 to 17.11.2021, raising invoices totaling Rs. 2,42,52,913/-. An outstanding opening balance of Rs. 26,56,467/- from the previous financial year was also due, making the total amount Rs. 2,69,09,380/-. The Corporate Debtor made payments amounting to Rs. 1,67,09,871/-, leaving an outstanding debt of Rs. 1,01,99,509/-. The Applicant served a demand notice under Section 8 of IBC, which was duly received by the Corporate Debtor. The Tribunal found that the documents provided, including invoices and ledger accounts, confirmed the existence of the operational debt and default.

3. Existence of a pre-existing dispute:

The Corporate Debtor argued that the amount claimed did not fall under the definition of operational debt and that there was a dispute regarding the quality of goods supplied. However, the Tribunal noted that no notice of such defects was given to the Applicant, and no supporting evidence was provided by the Corporate Debtor. The ledger account maintained by the Applicant, acknowledged by the Corporate Debtor, showed the outstanding amount. Therefore, the Tribunal concluded that there was no pre-existing dispute, and the contention of the Corporate Debtor was merely to avoid the applicability of IBC provisions.

4. Appointment of Interim Resolution Professional (IRP):

The Applicant proposed the name of Mr. Chand Prakash Bhatia as the IRP, who was duly registered with the Insolvency and Bankruptcy Board of India. The Tribunal appointed Mr. Bhatia as the IRP, directing him to take necessary steps under the statute, including issuing publications, calling for claims from creditors, and managing the affairs of the Corporate Debtor during the CIRP. A moratorium under Section 14 of IBC was invoked, and the Applicant was directed to deposit Rs. 2,00,000/- to defray the IRP's expenses.

Conclusion:

The Tribunal admitted the application under Section 9 of IBC, finding that the Corporate Debtor had defaulted in repayment of the operational debt and that there was no pre-existing dispute. The IRP was appointed to take over the affairs of the Corporate Debtor, and the moratorium was invoked as per the provisions of IBC. The application was found to be maintainable, and the CIRP was initiated accordingly.

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