2019 (1) TMI 1570 - Tri - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process (CIRP) - whether the demand notice in form No.3 dated 19.09.2017 was properly served - principles of natural justice - HELD THAT - It was argued by the learned counsel for the Operational Creditor that the address of the Corporate Debtor was changed much after the petition was filed on 29.01.2018 and therefore service of the demand notice upon the registered address as shown in the then master data was a valid service. The learned counsel for the Corporate Debtor has argued that the relocation was done before 16.02.2018 - However no evidence in this regard is furnished. In view of the above discussion the service by speed post at the then registered address of the Corporate Debtor is held to be a valid service. Presence of dispute or not? - HELD THAT - It is held that the Corporate Debtor has not been able to prove that a dispute truly exists in fact. The dispute raised is in the nature of spurious hypothetical or illusory dispute and therefore the contentions raised are rejected. In the present case no averments have made before us that the application under Section 9(2) is not complete. We have gone through the contents of the application and find the same to be complete. As discussed above there is an unpaid operational debt amounting to 13, 04, 521/- comprising of outstanding amount of invoices of 11, 29, 565/- and interest at 1.5% per month up to 02.01.2018 of 1, 74, 956/- (Interest @ 1.5% per month is provided for in Clause 4 of the Security Services Agreement dated 04.04.2016). In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code the petition for initiation of the CIRP process in the case of the Corporate Debtor M/s Quickdel Logistics Pvt. Ltd. is admitted - Moratorium declared.

Summary

Issues Involved:

1. Proper service of demand notice.
2. Existence of a dispute regarding the debt.
3. Compliance with Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016.
4. Appointment of Interim Resolution Professional (IRP).

Issue-wise Detailed Analysis:

1. Proper Service of Demand Notice:

The first issue for consideration was whether the demand notice in Form No.3 dated 19.09.2017 was properly served. The demand notice was sent to the registered office of the Corporate Debtor as per the master data, and the tracking report confirmed its delivery on 23.09.2017. The Corporate Debtor argued that it had relocated to a new address, but the tribunal found that the change of address was registered after the petition was filed. Hence, the service of the demand notice at the registered address was deemed valid.

2. Existence of a Dispute Regarding the Debt:

The tribunal examined whether there was a genuine dispute concerning the debt. The Corporate Debtor claimed that it had paid a total sum of ?58,96,992/- and that ?2,50,000/- was recoverable from the Operational Creditor. However, the tribunal found inconsistencies in the ledger provided by the Corporate Debtor and noted that the invoices from January to April 2017 were not included. The tribunal also considered the allegations of theft and unprofessional conduct by the security guards but found that these issues were amicably settled, as evidenced by the payment of invoices for the months in question. The tribunal concluded that the dispute raised by the Corporate Debtor was spurious, hypothetical, or illusory.

3. Compliance with Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016:

The tribunal reviewed the application under Section 9(2) of the Code and found it to be complete. It was established that there was an unpaid operational debt amounting to ?13,04,521/-, comprising outstanding invoices of ?11,29,565/- and interest of ?1,74,956/-. The tribunal confirmed that the demand notice was properly delivered, no reply was furnished by the Corporate Debtor, and no pre-existing dispute was proved. As the Operational Creditor did not propose a Resolution Professional, Section 9(5)(i)(e) was not applicable.

4. Appointment of Interim Resolution Professional (IRP):

Since the Operational Creditor did not propose an IRP, the tribunal referred to the panel of resolution professionals approved by the National Company Law Tribunal, New Delhi. Mr. Gyaneshwar Sahai was selected and appointed as the IRP. The tribunal directed the IRP to take control of the Corporate Debtor's assets, make a public announcement, constitute a committee of creditors, and file regular progress reports.

Conclusion:

The tribunal admitted the petition for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declared a moratorium, and appointed Mr. Gyaneshwar Sahai as the Interim Resolution Professional. The tribunal's decision was based on the satisfaction of the conditions provided in Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016.