2019 (4) TMI 1739 - AT - Insolvency and Bankruptcy

Maintainability of petition - initiation of Corporate Insolvency Resolution Process - inability on the part of Corporate Debtor to liquidate its outstanding debt - Section 9 of the Insolvency Bankruptcy Code, 2016 - HELD THAT - Upon filing of the present petition, the Corporate Debtor was issued notice. Since they failed to appear in Court to resist the petition, they were proceeded ex parte. In view of the facts and circumstances of the case which remain undemolished and uncontested, the prayer of the Operational Creditor merits consideration. Petition admitted - moratorium declared.

Summary

Issues involved:
1. Initiation of Corporate Insolvency Resolution under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Non-payment of outstanding dues by the Corporate Debtor to the Operational Creditor.
3. Admittance of the petition and appointment of an Interim Resolution Professional (IRP).
4. Direction for the Operational Creditor to deposit funds for IRP expenses.

Analysis:
1. The petition was filed under Section 9 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution due to the Corporate Debtor's failure to liquidate its outstanding debt towards the Operational Creditor. The Corporate Debtor, engaged in the manufacture and sale of cheese products, had requested the Operational Creditor to supply and install an indexing conveyor belt. Despite multiple demands and legal notices, the Corporate Debtor failed to pay the outstanding dues of ?2,11,102/-, leading to the petition under Section 9.

2. The Corporate Debtor, after receiving the upgraded parts and equipment, acknowledged the receipt but did not clear the dues. The Operational Creditor raised an invoice for the new motor and transportation charges, which remained unpaid. The Corporate Debtor's non-response to the demands and legal notice prompted the Operational Creditor to file the petition, which was duly served to the Corporate Debtor under Section 8 of the Code. As the Corporate Debtor did not contest the petition, they were proceeded ex parte, leading to the admission of the petition.

3. The Tribunal admitted the petition and imposed a moratorium under Section 14 of the Code, prohibiting suits or proceedings against the Corporate Debtor and any alienation of assets. An Interim Resolution Professional (IRP) was appointed to oversee the resolution process. The Operational Creditor was directed to deposit ?2 lakhs for IRP expenses, which would be reimbursed as Corporate Insolvency Resolution costs. The appointed IRP was mandated to comply with the provisions of the Code and file a report accordingly.

4. The Tribunal directed the Operational Creditor to communicate the order to both parties and the IRP. Additionally, the Operational Creditor was instructed to deposit funds for IRP expenses to ensure the smooth continuation of the Corporate Insolvency Resolution process. The case was scheduled for further consideration on 10th June 2019 to monitor the progress and compliance with the Code's provisions.