2017 (6) TMI 1302 - Tri - Insolvency and Bankruptcy

Maintainability of petition - Initiation of CIRP - reference of dispute relating to the unpaid operational debt - section 9 (3)(b)(c) of I B Code, 2016 - filing of application by a duly authorised person - authorized directors or not - HELD THAT - Having been satisfied that all the requirements under law have been fulfilled by the operational creditor for pressing section 9 of I B Code, 2016, we hereby allow the application and order the commencement of the corporate insolvency resolution process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Authority of the person filing the application under section 9 of the I&B Code, 2016.
2. Requirement of a specific resolution by the Board of Directors for issuing a demand notice.
3. Validity of objections raised by the respondent.
4. Merits of the case regarding outstanding debt and default.
5. Appointment of an interim insolvency professional and commencement of the corporate insolvency resolution process.

Issue 1: Authority of the person filing the application:
The respondent raised objections regarding the authority of the person filing the application, stating the absence of a Board resolution. However, the applicant produced a Board resolution confirming the authority. Citing a Mumbai High Court judgment, it was clarified that under Section 9 of the I&B Code, 2016, no specific resolution is required for issuing a demand notice. The objections were deemed meritless and rejected.

Issue 2: Requirement of a specific resolution for a demand notice:
The respondent contended that a Director lacked authority to issue a notice without a specific Board resolution. The applicant referenced legal precedents, highlighting that under the I&B Code, 2016, no specific resolution is mandated for issuing a notice. The objections were dismissed based on this interpretation.

Issue 3: Validity of objections raised by the respondent:
The respondent raised objections regarding the lack of authority in filing the application and issuing the demand notice. However, the applicant provided evidence of due authority through a Board resolution, which was deemed sufficient under the I&B Code, 2016. The objections were considered devoid of merit and rejected.

Issue 4: Merits of the case regarding outstanding debt and default:
The applicant presented documents supporting the existence of outstanding debt and default by the respondent. The respondent disputed certain invoices' authenticity but acknowledged some outstanding debts. The Tribunal found a clear case of default and ordered the commencement of the corporate insolvency resolution process.

Issue 5: Appointment of an interim insolvency professional:
An interim insolvency professional was appointed to oversee the corporate debtor immediately. The professional was tasked with initiating the resolution process, including public announcements and submission calls for claims. A moratorium was declared to protect the debtor's assets during the resolution process.

In conclusion, the Tribunal addressed various issues related to the authority of the applicant, the necessity of a Board resolution for issuing a demand notice, the validity of objections raised by the respondent, the merits of the case concerning outstanding debt and default, and the appointment of an interim insolvency professional to commence the corporate insolvency resolution process. The judgment clarified legal requirements under the I&B Code, 2016 and ensured due process in resolving the operational creditor's claims against the corporate debtor.