Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2020 (4) TMI Tri This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (4) TMI 511 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - It is always open to the 'Corporate Debtor' to point out existence of dispute, if any or to show that claimed amount has been paid already and there is no debt due and payable. However, such existence of dispute should be that of a period prior to the issuance of the demand notice under section 8(1) of the Code. In Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. 2017 (9) TMI 1270 - SUPREME COURT , the Hon'ble Supreme Court held that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing - i.e. it must exist before the receipt of the demand notice or invoice, as the case maybe. It is clear that the existence of dispute must be pre-existing i.e. it must exist prior to issuance of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the 'operational debt' is exceeding ₹ 1 lakh and the application shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid 'operational debt', the application under section 9 cannot be rejected and is required to be admitted. Merely because the 'Corporate Debtor' has disputed the claim by showing that there is certain counter claim, it cannot be held that there is pre-existence of dispute - when the facts of the instant case are considered, it is observed that having received the statutory notice u/s 8 from the Operational Creditor, the Corporate Debtor had sent a reply within 10 days of receipt of the notice. This Adjudicating Authority is satisfied that the Operational Creditor has proved its case by placing evidence that default has occurred for which the Corporate Debtor was liable to pay - Petition admitted - moratorium declared.
Issues Involved:
1. Existence of Operational Debt 2. Pre-existing Dispute 3. Admission of Corporate Insolvency Resolution Process (CIRP) 4. Appointment of Interim Resolution Professional (IRP) 5. Declaration of Moratorium Issue-wise Detailed Analysis: 1. Existence of Operational Debt: The Petitioner, an Operational Creditor, supplied goods to the Respondent, a Corporate Debtor, and raised invoices for the same. The Corporate Debtor admitted to receiving the goods and acknowledged the debt but disputed the amount claimed. The Petitioner provided documentary evidence, including purchase orders, invoices, and email correspondence, to substantiate the existence of the operational debt. 2. Pre-existing Dispute: The Corporate Debtor argued that there were quality issues with the goods supplied, which led to disputes over the amount payable. However, the Tribunal noted that the Corporate Debtor did not raise any pre-existing dispute in its reply to the statutory demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC). The Corporate Debtor only disputed the quantum of the debt and suggested reconciliation of accounts, which does not qualify as a pre-existing dispute under the IBC. 3. Admission of Corporate Insolvency Resolution Process (CIRP): The Tribunal evaluated whether the application met the criteria under Section 9 of the IBC. It concluded that the operational debt exceeded the threshold of ?1 lakh, and there was no pre-existing dispute. The Corporate Debtor's acknowledgment of a lesser amount due did not negate the fact that a default had occurred. The Tribunal held that the application satisfied the requirements for admission under Section 9 of the IBC. 4. Appointment of Interim Resolution Professional (IRP): The Tribunal appointed Mr. Chillale Rajesh as the Interim Resolution Professional (IRP) to take charge of the Corporate Debtor's management. The IRP was directed to make a public announcement and call for submissions of claims as prescribed under the IBC. 5. Declaration of Moratorium: The Tribunal declared a moratorium effective from the date of the order until the completion of the CIRP. The moratorium prohibits the institution of suits, transferring of assets, and recovery actions against the Corporate Debtor. It also ensures the continuation of essential goods and services during the moratorium period. Conclusion: The Tribunal admitted the petition for initiating the CIRP against the Corporate Debtor, appointed an IRP, and declared a moratorium. The decision was based on the absence of a pre-existing dispute and the acknowledgment of debt by the Corporate Debtor, fulfilling the requirements under Section 9 of the IBC.
|