2022 (9) TMI 802 - Tri - Insolvency and Bankruptcy

Tribunal initiates CIRP against Corporate Debtor, appoints IRP, and declares moratorium.

The Tribunal found no pre-existing dispute and initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. An Interim ... 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:- On perusal of the pleadings, it is found that the operational creditor filed the present application on the basis of demand notice dated 06.06.2019, which was duly served on and replied by the Corporate Debtor on 22.06.2019 and therefore, this contention raised above has no basis. It is an admitted fact that the applicant in the present petition has supplied the goods; therefore, the applicant falls within the definition of the Operational Creditor. The debt and default are also not denied by the Corporate Debtor. The only issue left before this Adjudicating Authority is whether there was any 'pre-existing dispute' raised by the corporate debtor before issuance of section 8 notice by the Operational Creditor - In the present matter demand notice u/s. 8 of IBC, 2016 was sent on 06.06.2019 by the operational creditor and same was replied by the corporate debtor on 21.06.2019, wherein, the corporate debtor has raised objection with respect to deficiency in services, misrepresentation of facts and losses suffered by corporate debtor and also raised the objection with respect to format of demand notice u/s. 8 of IBC, 2016. In order to establish that there is pre-existing dispute pending, the corporate debtor relied on the emails dated 20.03.2017, 23.03.2017, 28.03.2017, 03.04.2017, 28.08.2017, 10.09.2017, 25.10.2017, 01.11.2017, 04.11.2017, 05.12.2017, 12.12.2017, 13.08.2018. It is pertinent to discuss herein, that the corporate debtor has made payments of an amount of Rs. 3,98,958/- on 08.02.2018, Rs. 22,36,225/- on 15.02.2018 and Rs. 10,00,000/- on 12.06.2018 i.e., even after raising dispute through emails as evident from ledger account annexed as Annexure A-2 - there is no preexisting dispute pending on the date when the operational creditor sent the demand notice u/s. 8 of IBC, 2016 and therefore the judgment of Hon'ble Supreme Court relied upon by the Corporate Debtor is not applicable in the present matter. Therefore, this Adjudicating Authority is inclined to initiate the CIR Proceeding of the Corporate Debtor. Application admitted - moratorium declared. Issues Involved:1. Application under Section 9 of the Insolvency & Bankruptcy Code, 2016.2. Existence of operational debt and default.3. Alleged pre-existing dispute between the parties.4. Appointment of Interim Resolution Professional (IRP).5. Declaration of moratorium.Issue-wise Detailed Analysis:1. Application under Section 9 of the Insolvency & Bankruptcy Code, 2016:The application was filed by the Operational Creditor, M/s. Swastik Pipe Limited, under Section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016) seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Strolar Mounting Systems Private Limited. The Operational Creditor requested the declaration of a moratorium and the appointment of an Interim Resolution Professional (IRP).2. Existence of operational debt and default:The Operational Creditor supplied Module Mounting Structure to the Corporate Debtor and raised invoices amounting to Rs. 51,96,280/-. Payments were made by the Corporate Debtor up to 12.06.2018, but subsequent defaults occurred. Despite a statutory demand notice dated 06.06.2019, the operational debt remained unpaid, leading to the claim of Rs. 34,27,620.60/- as the operational debt in default.3. Alleged pre-existing dispute between the parties:The Corporate Debtor contended that the petition was not maintainable due to a pre-existing dispute regarding the deficiency of services provided by the Operational Creditor. The Corporate Debtor cited several emails and an invoice dated 09.05.2019 for losses due to defective goods to substantiate the claim of a pre-existing dispute. However, the Operational Creditor refuted these claims, arguing that the emails indicated mere negotiations and that the invoice was not based on any agreement. The Tribunal examined the nature of the alleged disputes and concluded that the payments made by the Corporate Debtor after the emails indicated resolution of any disputes. The Tribunal also noted that the invoice dated 09.05.2019 was of a recovery nature, seeking liquidated damages, which the Tribunal is not empowered to adjudicate.4. Appointment of Interim Resolution Professional (IRP):The Operational Creditor did not propose any IRP. Therefore, the Tribunal appointed Mr. Rahul Khanna as the IRP from the list provided by the Insolvency and Bankruptcy Board of India (IBBI). The IRP was directed to submit his consent and valid Authorization of Assignment (AoA) and to take charge of the Corporate Debtor's management immediately.5. Declaration of moratorium:The Tribunal declared a moratorium effective from the date of the order until the completion of the CIRP. The moratorium prohibited:- The institution or continuation of suits or proceedings against the Corporate Debtor.- Transferring, encumbering, alienating, or disposing of the Corporate Debtor's assets.- Actions to foreclose, recover, or enforce any security interest.- Recovery of property by an owner or lessor.- Suspension or termination of licenses, permits, or similar grants due to insolvency.The Tribunal also directed the IRP to comply with Sections 13(2), 15, 17, and 18 of the IBC, 2016, and the Corporate Debtor's directors and associated persons to extend cooperation to the IRP. The Operational Creditor was instructed to provide initial finance for the CIRP process and to communicate the order to the IRP and the Corporate Debtor. The Registry was directed to update the status of the Corporate Debtor on the MCA-21 site of the Ministry of Corporate Affairs.Conclusion:The Tribunal found no pre-existing dispute and initiated the CIRP against the Corporate Debtor, appointing an IRP and declaring a moratorium as per the provisions of the IBC, 2016.