2017 (8) TMI 1391 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - proof of existing dispute - Held that - There is no dispute pending between the parties under the meaning and definition of section 5(3) of the IB Code 2016 as the aforesaid pending matters are nowhere connected to the payment of dues in question. Also, there is no technical lacuna as the petitioner has complied with all the requirements under the law. This Adjudicating authority is satisfied that the petitioner has made out his case by establishing that this Corporate Debtor has defaulted the payment dues on various occasion to this petitioner/OC and there is no dispute between the parties. Thus inclined to admit the instant application. Instant petition is admitted and order the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within 180 days, reckoning from the day of this order is passed.

Summary

Issues:
1. Determination of a Company Petition filed under specific sections of the Companies Act, 1956, now governed by the Insolvency and Bankruptcy Code, 2016.
2. Allegations of non-payment of dues by the Corporate Debtor leading to the initiation of Corporate Insolvency Resolution Process.
3. Disputes raised by the Respondent regarding the maintainability of the petition and non-compliance with relevant sections of the IB Code 2016.
4. Examination of pending litigations between the parties and their impact on the present petition.
5. Interpretation of the requirement of prior notice under section 8 of the IB Code 2016.
6. Compliance with the provisions of the IB Code 2016 and MCA Notification dated 29.06.2017 by the Operational Creditor.
7. Appointment of an Interim Resolution Professional and declaration of moratorium.

Detailed Analysis:

1. The Tribunal considered a Company Petition filed by an Operational Creditor against a Corporate Debtor under specific sections of the Companies Act, 1956, now transferred to the tribunal as per the Insolvency and Bankruptcy Code, 2016. The petition sought the initiation of Corporate Insolvency Resolution Process due to alleged non-payment of dues by the Corporate Debtor.

2. The Operational Creditor, engaged in manufacturing industrial pipeline valves, claimed that the Corporate Debtor had received products on credit basis without disputing the quality or quantity. After issuing statutory notices for payment, the Operational Creditor sought resolution under the IB Code 2016.

3. The Respondent raised objections to the petition's maintainability, citing non-compliance with specific sections of the IB Code 2016. Additionally, the Respondent highlighted pending litigations between the parties, alleging the petition's filing as a retaliatory measure.

4. The Tribunal analyzed the pending disputes and determined that they were unrelated to the payment dues in question, finding no technical lacuna in the petition's compliance with the law. The Tribunal concluded that the Operational Creditor had established the Corporate Debtor's default in payment without any ongoing dispute between the parties.

5. The Respondent emphasized the necessity of prior notice under section 8 of the IB Code 2016, citing judgments supporting this requirement. However, the Operational Creditor contended that such notice was not applicable to transferred matters from High Courts to NCLT Benches.

6. The Tribunal found that the Operational Creditor had fulfilled all requirements under the IB Code 2016 and the MCA Notification. The appointment of an Interim Resolution Professional was approved, and a moratorium was declared to facilitate the Corporate Insolvency Resolution Process.

7. The Tribunal directed the IRP to take charge of the Corporate Debtor's management, initiate public announcements, and ensure compliance with the Code's provisions. The order included instructions for the continuation of essential services and cooperation from directors and associated persons with the Corporate Debtor.