Transport services company enters insolvency process after admitting default on undisputed operational debt under IBC

The NCLT Bengaluru admitted an application for initiating CIRP against a corporate debtor who defaulted on payment for transport services. The operational creditor's petition was filed in accordance with the Code provisions, with the debt and default being undisputed and admitted by the respondent. The tribunal appointed the suggested qualified resolution professional as IRP after verifying his eligibility and consent, and declared a moratorium on the corporate debtor's assets.

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Issues involved:
The issues involved in the judgment are the initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016, by an Operational Creditor against a Corporate Debtor for default in payment for transport services.

Summary:

Issue 1: Debt and Default Allegations
The Petitioner, an Operational Creditor, filed a petition under Section 9 of the IBC, 2016, seeking to initiate CIRP against the Respondent, a Corporate Debtor, for defaulting on payment of Rs.34,00,347 for transport services as per the Transport Services Agreement. The Respondent acknowledged the debt but raised issues regarding its financial difficulties and inability to make payments.

Issue 2: Arguments and Counter-Arguments
The Respondent contended that it had a good business relationship with the Petitioner for over 5 years but faced financial challenges leading to a significant drop in revenue. The Respondent argued that the Operational Creditor would not receive any amount as per Section 53 of the IBC, 2016, if the application was admitted. The Respondent also claimed that the Operational Creditor was misusing the provisions of the Code for recovery purposes.

Issue 3: Adjudication and Decision
After hearing the arguments, the Adjudicating Authority found that the debt and default were not in dispute. The Petitioner had followed the provisions of the Code and suggested a qualified Resolution Professional for the case. Therefore, the Authority admitted the petition, initiated CIRP, and appointed an Interim Resolution Professional. A moratorium was declared, prohibiting certain actions against the Corporate Debtor, and the IRP was directed to comply with all relevant provisions and file progress reports periodically.

Conclusion
The judgment involved the admission of a petition for CIRP against a Corporate Debtor based on default in payment for transport services. Despite the Respondent's financial difficulties, the Adjudicating Authority found the petition admissible and appointed an IRP to oversee the resolution process.

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