2017 (8) TMI 1524 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - existence of admitted debt - Whether the Petitioner complied with requisite provisions of Sec 9 of IBC 2016 to maintain the petition? - HELD THAT - The record do not show that there is any dispute of debt before issuing demand notice to pay the debt in question. All the contentions with regard to dispute/counter claim /arbitration are after thought that too after receiving the demand notice issued by the petitioner. Therefore, the facts prima facie show that there is an admitted debt and the respondent is unable to pay debt in question. The Respondent, though given sufficient time by this Tribunal to come out with any solution to resolve outstanding dues, have not come with any solution,more over they have raised un-tenable and baseless grounds. In fact, the respondent has admitted that they are unable to clear outstanding due to several difficulties. Though circumstances warrant that the Company is liable to be liquidated, an effort should be made through CIRP to find any possibility of any resolution. Hence, it is a fit case for admission. In the result the Company Petition is admitted by exercising the powers UIS 9(5)(i) IBC 2016

Summary

Issues involved:
1. Compliance with Sec 9 of IBC 2016 for maintaining the petition
2. Admittance of the debt in question
3. Solvency of the Respondent Company

Analysis:

Issue 1 - Compliance with Sec 9 of IBC 2016:
The Petitioner filed the Company Petition in accordance with the provisions of Section 9 of IBC 2016, ensuring proper adherence to Debt, Default, and Nomination of IRP. The correspondence between the parties, starting with the Manufacturing and Supply Agreement, highlights the business relationship's evolution. Despite the Respondent's claim that the Agreement was not properly executed, they themselves relied on its terms and conditions regarding the alleged failure of commitment by the Respondent. The Respondent's contention of illegal termination of the Agreement was also raised, emphasizing the importance of contractual obligations.

Issue 2 - Admittance of the debt:
The Respondent's letter dated 26/12/2014 acknowledged the outstanding payment due to the Petitioner, citing difficulties in payment and proposing a schedule for reducing the outstanding amount. Despite this acknowledgment, the Respondent failed to clear the debt, leading to the Petitioner issuing a demand notice. Subsequent disputes and counterclaims raised by the Respondent were deemed as afterthoughts following the demand notice. The facts indicate an admitted debt by the Respondent, who failed to provide substantial evidence to refute it.

Issue 3 - Solvency of the Respondent Company:
The Respondent, despite being given ample time to address the outstanding dues, failed to present a viable solution and raised unsubstantiated grounds. Their admission of inability to clear the outstanding dues due to various difficulties suggests insolvency. While liquidation seems warranted, the Tribunal opted for initiating the Corporate Insolvency Resolution Process (CIRP) to explore potential resolutions. The admission of the Company Petition and the appointment of an Interim Resolution Professional were deemed appropriate in the circumstances.

In conclusion, the Tribunal admitted the Company Petition and appointed an Interim Resolution Professional to initiate the CIRP. A moratorium was declared, and public announcements were mandated to facilitate the resolution process. The IRP was directed to follow all IBC rules and regulations, ensuring fairness and cooperation from all parties involved. The case was scheduled for further updates on the progress of the CIRP, emphasizing the importance of timely resolution within the prescribed period.