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2019 (4) TMI 1743 - Tri - Insolvency and BankruptcyInitiation of Corporate Insolvency Resolution Process - Corporate Debtor defaulted in repayment of sum - Section 9 of Insolvency and Bankruptcy Code 2016 R/ w Rule 6 of Insolvency Bankruptcy (Application to the Adjudicating Authority) Rules 2016 - HELD THAT - The Petitioner Supplied goods to the Corporate Debtor as per directions given in the purchase orders but the Corporate Debtor tries to pass the liability on the USA Company which cannot be accepted and hence Corporate Debtor failed to pay invoices raised by the petitioner and has committed the default and the amount of Rs. 10, 995, 593 remained unpaid. Therefore there are grounds to admit the petition - Petition is admitted. The Adjudicating Authority admits this Petition under Section 9 of IBC 2016 declaring moratorium for the purposes referred to in Section 14 of the Code.
Issues Involved:
1. Default in repaying debt by Corporate Debtor. 2. Supply of goods and raising of invoices. 3. Dispute over the recipient of goods and the entity responsible for payment. 4. Termination of the International Distribution Agreement. 5. Appointment of Interim Resolution Professional and declaration of moratorium. Issue-wise Detailed Analysis: 1. Default in repaying debt by Corporate Debtor: The petition was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, for the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to a default in repaying a sum of Rs. 10,995,593. The petitioner claimed that the debt arose from seven invoices raised for goods supplied, which included interest at 12% per annum. 2. Supply of goods and raising of invoices: The Operational Creditor asserted that goods were supplied to the Corporate Debtor based on purchase orders and an International Distributor Agreement dated 01st July 2010. Invoices were raised for the supplied goods, amounting to Rs. 10,995,593. The Corporate Debtor, however, contended that the goods were not supplied to them but to other entities, specifically Excel Eltech Pte Ltd, Singapore, and Excel Eltech Inc, USA. 3. Dispute over the recipient of goods and the entity responsible for payment: The Corporate Debtor argued that they were merely an ordering customer and that the invoices were raised on Excel Eltech Inc, USA, not on them. They also claimed that they did not receive any goods and had no creditor-debtor relationship with the Operational Creditor. The tribunal found that the goods were supplied as per the Corporate Debtor’s directions, with the billing address in the USA and the shipping address in Singapore. The tribunal held the Corporate Debtor responsible for the debt, as they were the ones who placed the purchase orders. 4. Termination of the International Distribution Agreement: The Corporate Debtor claimed that the Operational Creditor unilaterally terminated the International Distribution Agreement on 30th September 2016, causing them significant losses. They argued that there was a pre-existing dispute regarding the return of inventory and adjustment of invoices. The tribunal noted that some invoices were raised before the termination of the agreement and that the termination was in accordance with the agreement’s terms. The tribunal concluded that the termination did not affect the liability for the unpaid invoices. 5. Appointment of Interim Resolution Professional and declaration of moratorium: The tribunal admitted the petition and initiated the CIRP. It appointed Mr. Ravichandra Mohan Kadiyala as the Interim Resolution Professional (IRP) and declared a moratorium as per Section 14 of the Code. The tribunal directed the IRP to perform his duties in accordance with the Code and emphasized the cooperation required from the Corporate Debtor’s personnel. The tribunal also directed the petitioner to pay Rs. 2,00,000 to the IRP for expenses, subject to adjustment by the committee of creditors. Conclusion: The tribunal concluded that the Corporate Debtor failed to pay the invoices raised by the Operational Creditor and committed a default. The petition was admitted, and the CIRP was initiated with the appointment of an IRP and the declaration of a moratorium. The tribunal emphasized the responsibilities of the IRP and the necessity for cooperation from the Corporate Debtor’s personnel.
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