2018 (1) TMI 1365 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - default in making payment of dues - Held that - From the documents placed on file and the arguments submitted by the Counsel for the Operational Creditor and Ld. Sr. Counsel for the Corporate Debtor, this Authority is satisfied that the Corporate Debtor defaulted in making payment of the outstanding debt claimed by the Operational Creditors. The Operational Creditors have fulfilled all the requirements of law. Therefore, CP is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. The moratorium is hereby declared which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process, for the purposes referred to in Section 14 of the I&B Code, 2016.

Summary

Issues Involved:
Adjudication of CP/607/(IB)/CB/2017 under Section 9 of the Insolvency and Bankruptcy Code 2016 for default in payment of wages by the Corporate Debtor to Operational Creditors.

Detailed Analysis:

Issue 1: Default in Payment of Wages
The Operational Creditors filed CP/607/(IB)/CB/2017 against the Corporate Debtor under Section 9 of the I&B Code, seeking initiation of Corporate Insolvency Resolution Process due to non-payment of wages. The Corporate Debtor failed to pay wages for 6 months, leading to a claim of ?23,77,978. Despite a direction from the Authority Appointed under the Payment of Wages Act, 1936, the Corporate Debtor did not settle the outstanding amount.

Issue 2: Maintainability of the Petition
The Corporate Debtor contended that the Operational Creditors, collectively filing the petition, did not qualify as 'Operational Creditors' under Section 5(20) of the I&B Code. However, the Tribunal rejected this argument, citing provisions allowing workmen to file jointly. The claim amount by individual workmen exceeded the prescribed threshold, making the application maintainable.

Issue 3: Admission of Application
After reviewing documents and arguments, the Tribunal found the Corporate Debtor in default of payment to the Operational Creditors. The Tribunal admitted the application, initiating the Corporate Insolvency Resolution Process, subject to completion within 180 days. A moratorium was declared to protect the Corporate Debtor's assets during the resolution process.

Issue 4: Appointment of Interim Resolution Professional (IRP)
As the Operational Creditors did not propose an IRP, the Tribunal appointed Mr. Shankar from the Panel of IRPs for Tamilnadu. The IRP was directed to manage the Corporate Debtor immediately, make public announcements, and solicit claims as per the I&B Code. Directors and associated persons were instructed to cooperate with the IRP.

Conclusion:
The Tribunal upheld the application, admitted it for Corporate Insolvency Resolution, declared a moratorium, and appointed an IRP to oversee the process. The Corporate Debtor's non-payment of wages led to the initiation of insolvency proceedings, emphasizing compliance with the I&B Code provisions throughout the resolution process.