2018 (2) TMI 1930 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate debtor defaulted in repayment of amount - operational creditor - Existence of dispute or not - HELD THAT - The Operational Creditor has issued valid purchase orders to the Debtor and also paid the Advance amount for the said purchase - on number of occasions the Debtor has accepted his default in payment of outstanding amount but has not repaid the outstanding amount. The Operational Creditor has established that the nature of Debt is an Operational Debt as defined under section 5(21) of the Definitions under The Code, as the Operational Creditor has issued a valid purchase orders and also paid the advance amount for those purchases. Further, he has also established that there is a Default as defined under section 3 (12) of The Code on the part of the Debtor - We have also perused the notice sent under Section 8 (2) of the Insolvency and Bankruptcy Code, 2016 and it came to our notice that the said notice is duly served upon the Debtor. Further, 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. Hence, admittedly there is no Dispute in respect of the outstanding Debt. Petition admitted - moratorium declared.

Summary

Issues:
1. Application for declaration of insolvency against a corporate debtor.
2. Validity of operational debt and default by the debtor.
3. Compliance with the provisions of the Insolvency and Bankruptcy Code.
4. Appointment of an interim resolution professional and initiation of the insolvency resolution process.

Analysis:
1. The petitioner, an operational creditor, filed an application seeking insolvency declaration against the debtor, citing non-repayment of an outstanding amount. The debtor had acknowledged the debt but failed to repay despite several reminders and a demand notice. The debtor did not contest the claim or attend the hearing, indicating acceptance of liability.

2. The tribunal found that the operational creditor had issued valid purchase orders and paid an advance amount, establishing the operational debt. The debtor admitted default in payment but failed to clear the outstanding amount. The notice of the insolvency application was duly served on the debtor, who did not raise any dispute within the stipulated time.

3. Considering the provisions of the Insolvency and Bankruptcy Code, the tribunal concluded that the operational creditor had met the criteria for an operational debt and established the debtor's default. The debtor's absence at the hearing and lack of representation further supported the admission of the insolvency petition.

4. Consequently, the tribunal admitted the petition, appointed an interim resolution professional, and imposed a moratorium on legal actions against the debtor. The appointed professional was directed to comply with the Code's provisions, provide progress reports, and initiate the corporate insolvency resolution process promptly. The commencement of the resolution process was deemed effective from the order's date.