2017 (8) TMI 1546 - Tri - Insolvency and Bankruptcy

Initiation of CIRP - existence of debt or not - nature of debt - operational debt or otherwise? - validity of Notice sent under Section 8 (2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is established by the Operational Creditor that the nature of Debt is an Operational Debt as defined under section 5(21) of the Definitions under The Code. It has also been established that admittedly there was a Default as defined under section 3(12) of The Code on the part of the Corporate Debtor. On the basis of the evidences on record the Petitioner has established that the advance was given against the goods to be supplied and invoices were raised to claim the amount but there was non-payment of Debt on the part of the Corporate Debtor. Notice sent under Section 8 (2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - If the Respondent wanted to place on record evidence of 'dispute' then he could have raised the objection within 10 days as prescribed under section 8(2) of The Code which had also lapsed now - As a consequence, after the expiry of the period as prescribed and keeping admitted facts in mind that the Operational Creditor had not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under The Code have been completed by the Petitioner we are of the conscientious view that this Petition deserves 'Admission'. Having admitted the Application, the provisions of Moratorium as prescribed under Section 14 of the Code shall be operative henceforth with effect from the date of order shall be applicable by prohibiting institution of any Suit before a Court of Law, transferring/encumbering any of the assets of the Debtor etc. However, the supply of essential goods or services to the Corporate Debtor shall not be terminated during Moratorium period. It shall be effective till completion of the Insolvency Resolution Process or until the approval of the Resolution Plan prescribed under Section 31 of the Code. Petition admitted.

Summary

Issues:
1. Petition filed under Section 9 of the Insolvency and Bankruptcy Code by an Operational Creditor.
2. Default in payment by the Corporate Debtor.
3. Non-payment of outstanding dues leading to the initiation of insolvency proceedings.
4. Appointment of an Interim Resolution Professional and commencement of the Corporate Insolvency Resolution Process.

Analysis:

1. The Petitioner, an Operational Creditor, filed a petition invoking Section 9 of the Insolvency and Bankruptcy Code, submitting Form No. 5 under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016. The petition detailed the operational debt owed by the Corporate Debtor, M/S. S. N. Plumbing Private Limited, for various supplies including pipe fittings, safety helmets, and industrial hardware, among others.

2. The Petition highlighted that despite multiple invoices raised by the Operational Creditor, the Corporate Debtor failed to make payments. The last payment was made on 10th November, 2015, and subsequent cheques issued for part payments bounced due to insufficient funds. A Notice under section 8 was issued on 17th July, 2017, as per the prescribed form, and the Corporate Debtor did not raise any dispute or objection to the demand notice.

3. The Tribunal examined the evidence presented and found that the nature of the debt qualified as an "Operational Debt" under the Code. It was established that there was a default on the part of the Corporate Debtor, as defined under the Code, and the Operational Creditor had not received any payments post the notice issued under section 8. The Tribunal concluded that the petition deserved admission based on the facts presented.

4. Following the admission of the petition, an Insolvency Professional was proposed by the Operational Creditor and appointed as the Interim Resolution Professional to conduct the Insolvency Resolution Process. The provisions of Moratorium under Section 14 of the Code were deemed operative, prohibiting certain actions against the Corporate Debtor. The next steps, including the Public Announcement of the Insolvency Resolution Process, were outlined, and the Interim Resolution Professional was directed to comply with the Code's provisions and report progress to the Tribunal within the specified timeframe.

In conclusion, the Tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process effective from the date of the order, with specific directions and obligations placed on the appointed Interim Resolution Professional to oversee the resolution proceedings diligently.