2017 (10) TMI 1502 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of debt and dispute or not - Section 9 Of the Insolvency Bankruptcy Code, 2016 (hereinafter referred to as I B Code) 2016 read with Rule 6 (1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT - The present application has been filed relating to invoices which have been raised regarding the service rendered at Orissa for which contract was separate. The corporate debtor has not filed any document to show that there was any pre -existing dispute regarding service rendered in Orissa. The corporate debtor has not filed a reply to the demand notice under the statutory period prescribed under Sec.8(2) of the I B Code - Therefore, on the basis of law laid down by Hon ble Supreme Court in the case of Mobilex Innovations Private Limited 2017 (9) TMI 1270 - SUPREME COURT it is clear that corporate debtor has taken the defence of existence of dispute as a frivolous ground and in fact no dispute truly exists in between the parties relating to the service rendered by the operational creditor in Orissa for which contract was separate. On the basis of the documents filed by the petitioner,' it is clear that operational creditor has before filing the petition issued demand notice under Sec.8(1) of the I B Code along with the copy of the invoices and it is also evident that after receiving the demand notice corporate debtor failed to issue any notice regarding existence of dispute or to record the pendency of the suit or arbitration proceedings relating to such dispute. The operational creditor has filed an affidavit in compliance with the provision of Sec.9(3)(b). The operational creditor has also filed a certified copy Of bank statement in compliance with the provision of Sec.9(3)(c) - From the documents filed by the petitioner, it is clear that no dispute was existing regarding the outstanding dues of the invoices raised for the service rendered by the operational creditor in the state of Orissa. It is also evident that the defence taken by the corporate debtor regarding the existence of a dispute is spurious and without any basis. In fact, the said dispute was existing relating to the service rendered by the operational creditor in UP for which there was separate agreement executed on different dates, and there was no interconnection between the contract made for Orissa and the contract awarded regarding the same service of UP. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Compliance with Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Existence of a pre-existing dispute.
3. Compliance with Section 9(3)(b) and 9(3)(c) of the Insolvency & Bankruptcy Code, 2016.
4. Appointment of Interim Resolution Professional (IRP).
5. Application of Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016.

Issue-wise Detailed Analysis:

1. Compliance with Section 9 of the Insolvency & Bankruptcy Code, 2016:
The petitioner, an operational creditor, filed the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, for initiating the corporate insolvency process against the corporate debtor. The operational creditor provided services and raised invoices which were partially paid, leaving an outstanding amount of ?49,02,344/-. Despite repeated reminders and a statutory demand notice issued on 15/6/2017, the corporate debtor failed to make the payment. The Tribunal found that the petitioner complied with the provisions of Section 8 by issuing a demand notice in the prescribed format and filing the necessary affidavits and documents.

2. Existence of a pre-existing dispute:
The corporate debtor claimed a pre-existing dispute, citing an email dated 7/4/2017, which allegedly indicated issues with the services provided. However, the Tribunal determined that the email pertained to a separate project in Uttar Pradesh, not the project in Orissa for which the invoices were raised. The Tribunal referenced the Supreme Court's guidelines in Mobilox Innovations Private Limited vs Kirusa Software Private Limited, emphasizing that the dispute must be plausible and not spurious. The Tribunal concluded that no genuine dispute existed regarding the Orissa project.

3. Compliance with Section 9(3)(b) and 9(3)(c) of the Insolvency & Bankruptcy Code, 2016:
The corporate debtor argued that the petition was incomplete and defective, particularly citing non-compliance with Section 9(3)(b) and 9(3)(c). The Tribunal noted that the petitioner filed an affidavit stating no notice of dispute was given by the corporate debtor, and a certified copy of the bank statement was provided instead of a bank certificate. The Tribunal acknowledged the practical difficulties in obtaining such certificates and accepted the bank statement as sufficient compliance, referencing the Supreme Court's judgment in Surendra Trading Co. vs. Juggilal Kamlapat Jute Mills Ltd. & Ors., which held that the seven-day period for rectifying defects is discretionary.

4. Appointment of Interim Resolution Professional (IRP):
The operational creditor proposed the name of Shri Chhedi Rajbhar as the Interim Resolution Professional (IRP). The Tribunal found no disciplinary proceedings pending against him and deemed him competent to be appointed as the IRP.

5. Application of Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016:
The Tribunal ordered the initiation of the Corporate Insolvency Process and applied a moratorium as per Section 14. The moratorium included the institution or continuation of suits, transferring or disposing of assets, and actions to recover property. The supply of essential goods or services to the corporate debtor was not to be terminated during the moratorium period. The moratorium would remain effective until the completion of the corporate insolvency resolution process or until an order for liquidation was passed.

Conclusion:
The petition for initiating the Corporate Insolvency Process under Section 9 of the Insolvency & Bankruptcy Code, 2016, was admitted. The Tribunal appointed Shri Chhedi Rajbhar as the Interim Resolution Professional and imposed a moratorium as per Section 14. The Tribunal found that there was no pre-existing dispute regarding the Orissa project and that the operational creditor had complied with the necessary provisions of the Insolvency & Bankruptcy Code, 2016.