2018 (8) TMI 1886 - Tri - Insolvency and Bankruptcy

Admissibility of application - initiation of CIRP - Corporate Debtor - Section 9 of the Insolvency Bankruptcy Code, 2016 r/w the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT - The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This Bench is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt claimed by the Operational Creditor. Application admitted and the commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application allowed - moratorium declared.

Summary

Issues Involved:
1. Admissibility of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Existence of operational debt and default by the Corporate Debtor.
3. Compliance with procedural requirements under the Insolvency & Bankruptcy Code, 2016.
4. Appointment of Interim Resolution Professional (IRP).
5. Declaration of moratorium.

Issue-wise Detailed Analysis:

1. Admissibility of the Application:
The Operational Creditor filed CP/344/(IB)/CB/2018 under Section 9 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The tribunal evaluated the pleadings and documents submitted, including the Joint Development Agreement (JDA) and subsequent communications between the parties. The tribunal concluded that the application was admissible as the Operational Creditor had fulfilled all legal requirements.

2. Existence of Operational Debt and Default:
The Operational Creditor claimed an outstanding debt of ?1,15,00,000 along with ?31,08,588 due and payable by the Corporate Debtor. The JDA dated 07.03.2010 outlined the construction obligations of the Corporate Debtor, which were not fully met, including provision for gensets, lift, external painting, and other facilities. The Corporate Debtor acknowledged the pending works and agreed to deposit ?50 Lakhs and later issued a post-dated cheque for ?1 crore, which was dishonored due to insufficient funds. The tribunal determined that the debt was operational in nature as defined under Sections 5(20) and 5(21) of the I&B Code, 2016, and the Corporate Debtor had defaulted on its payment obligations.

3. Compliance with Procedural Requirements:
The Operational Creditor issued a Demand Notice dated 16.01.2018 under Section 8 of the I&B Code, 2016, which the Corporate Debtor responded to on 29.01.2018, raising disputes for the first time. The tribunal noted that no prior dispute was raised by the Corporate Debtor before the notice. The Operational Creditor also fulfilled the requirements of Section 9 (3) (b) & (c) by filing an affidavit and providing a bank certificate. The tribunal found that all procedural requirements were met for the initiation of CIRP.

4. Appointment of Interim Resolution Professional (IRP):
The Operational Creditor did not propose an IRP, so the tribunal appointed Mr. Muthuiah Thevar Rajapandian as the IRP from the Panel of Insolvency Professionals recommended by the IBBI. The tribunal confirmed that no disciplinary proceedings were pending against the IRP and directed him to take charge of the Corporate Debtor's management immediately and comply with the provisions of Sections 13 (2), 15, 17 & 18 of the I&B Code, 2016.

5. Declaration of Moratorium:
The tribunal declared a moratorium effective from the date of the order until the completion of the CIRP. The moratorium prohibited:
- The institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, or disposing of the Corporate Debtor's assets.
- Any action to foreclose or enforce any security interest.
- Recovery of any property by an owner or lessor occupied by the Corporate Debtor.

The tribunal also ensured that the supply of essential goods or services to the Corporate Debtor would not be terminated during the moratorium period.

Conclusion:
The tribunal admitted the application, initiated the CIRP, declared the moratorium, and appointed the IRP, directing all necessary compliance and communication to facilitate the process.