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2019 (10) TMI 55 - Tri - Insolvency and BankruptcyAdmissibility of petition - initiation of CIRP - Corporate debtor - Section 9 of the Insolvency and Bankruptcy Code, 2016 - principles of res judicata - HELD THAT - Petitioner stated the name of the insolvency professional and filed his written communication. Petitioner also issued demand notice as required by section 8(1) read with Rule 5 of the Rules and served the same on the respondent. There is an occurrence of default in repayment to the operational creditor by corporate debtor and the corporate debtor made default in making repayment of the said debt - Proposed Interim Insolvency Resolution Professional has made a declaration that no disciplinary proceedings are pending against him - the petition is admitted. It is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code. Petition admitted.
Issues Involved:
1. Validity of notice issued under Section 8 of the Insolvency and Bankruptcy Code, 2016. 2. Application of principles of res judicata. 3. Admissibility of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016. 4. Appointment of Interim Resolution Professional and declaration of moratorium. Detailed Analysis: 1. Validity of Notice Issued Under Section 8 of the Insolvency and Bankruptcy Code, 2016: The initial application filed by the operational creditor was dismissed by the NCLAT on the grounds that the notice under Section 8 was issued by an advocate and not the operational creditor, and that no notice of hearing was issued by the Adjudicating Authority. The NCLAT relied on the decision in "Uttam Galva Steels Limited v. DF Deutsche Forfait AG," which held that an advocate without authority from the operational creditor cannot issue such notices. However, this legal position was later overturned by the Supreme Court in "Macquaire Bank Ltd. v. Shilpi Cable Technologies Ltd.," which held that a demand notice under Section 8 can be issued by a lawyer on behalf of the operational creditor. 2. Application of Principles of Res Judicata: The respondent argued that the principles of res judicata applied since the previous order was not challenged further and had become final. However, the Tribunal found that the earlier dismissal was not on merits but due to procedural issues regarding the issuance of notice. The Supreme Court's subsequent ruling clarified the legal position, allowing the current application to proceed. 3. Admissibility of the Petition Under Section 9 of the Insolvency and Bankruptcy Code, 2016: The Tribunal examined whether there was an operational debt exceeding ?1 lakh, whether the debt was due and payable, and whether there was any pre-existing dispute. The operational creditor provided invoices and a bank statement showing non-payment of ?41,84,270. The corporate debtor admitted to a debt of ?10,50,000 but contested the amount. The Tribunal found no pre-existing dispute or pending suit/arbitration, confirming the debt's existence and default. 4. Appointment of Interim Resolution Professional and Declaration of Moratorium: The Tribunal appointed Mr. Rajesh Lohia as the Interim Resolution Professional, directing him to make a public announcement and call for claims. A moratorium was declared prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the corporate debtor. Essential services to the corporate debtor were to continue uninterrupted during the moratorium period. Conclusion: The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process, appointing an Interim Resolution Professional, and declaring a moratorium. The petition was disposed of with no order as to costs, and all relevant parties were to be communicated with the order.
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