2020 (2) TMI 1423 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - pre-existing dispute present or not - HELD THAT - The corporate debtor has tried to create and establish a preexisting dispute by asserting that the goods were defective and deficient, delayed delivery and the invoices not being delivered only after receiving the notice under section 8 of Insolvency and Bankruptcy code. However, no documentary evidence or correspondence is placed on record by the corporate debtor to support the contentions and the said dispute was raised for the first time only after notice under section 8 of IBC was issued. None of the defences taken by the corporate debtor stands the test of proving any pre existing dispute. They are only statements made by Corporate Debtor but not even single objection is substantiated with any proof in support of evidence. Thus, it can be concluded that the dispute raised by the corporate debtor, is spurious, plainly frivolous, vexatious and does not categorize a genuine dispute as reproduced above and the contention of the corporate debtor, of a pre-existing dispute without any evidence and merit is a clear after though to defeat the claim of the applicant. The date of default is 12-9-2018 and the present application is filed on 05/01/2019. Hence the application is not time barred and filed within the period of limitation - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - It is pertinent to note that the corporate debtor has not placed on record any correspondences between the parties with respect to any disputes raised by the corporate debtor - The present application is filed on the Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the code and is complete. The applicant is entitled to claim its dues, establishing the default in payment of the operational debt. Hence, the application is admitted. Application admitted - moratorium declared.

Summary

Issues:
1. Application filed under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency process against the Corporate Debtor.
2. Dispute regarding non-payment of outstanding amount by the Corporate Debtor.
3. Jurisdiction of the Tribunal to entertain the application.
4. Compliance with procedural requirements under the Code.
5. Appointment of Interim Resolution Professional and imposition of moratorium.

Analysis:

1. The Applicant, a company incorporated in Hong Kong, filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency process against the Corporate Debtor, a company engaged in trading/import of mobile handsets and accessories. The Applicant alleged non-payment of outstanding amount despite delivery of goods and issuance of invoices.

2. The Corporate Debtor contested the application, claiming no default had occurred and raising issues regarding the quality and timeliness of goods delivered. However, the Tribunal found that the Corporate Debtor failed to provide documentary evidence supporting its contentions, and the alleged dispute was raised only after receiving the notice under the Code. The Tribunal concluded that the dispute raised by the Corporate Debtor was spurious and lacked merit, establishing the occurrence of default for payment of operational debt by the Applicant.

3. The Tribunal addressed the jurisdictional aspect, confirming its authority to entertain and try the application since the registered office of the Corporate Debtor was in Delhi. The Tribunal emphasized the importance of jurisdiction in adjudicating insolvency matters.

4. Procedural compliance was scrutinized, with the Tribunal noting that the Applicant had fulfilled the requirements under the Code by filing the application in the prescribed format and providing necessary documents. The Tribunal admitted the application, allowing the Applicant to claim its dues and establishing the default in payment of operational debt.

5. An Interim Resolution Professional (IRP) was appointed by the Tribunal, subject to certain conditions, to oversee the Corporate Insolvency Resolution Process (CIRP). The imposition of a moratorium was directed as per the provisions of the Code, prohibiting certain actions against the Corporate Debtor during the process. Additionally, the Operational Creditor was instructed to deposit a sum with the IRP to cover expenses and functions related to the CIRP, ensuring compliance with regulatory requirements.

This detailed analysis covers the key issues addressed in the judgment, providing a comprehensive understanding of the legal proceedings and outcomes.