2018 (7) TMI 2089 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in paying the debt - existence of debt and dispute or not - HELD THAT - Since the Corporate Debtor has failed to file a response before this Tribunal and a default of debt due to the Operational Creditor is in existence, remaining unsatisfied, this Tribunal is of the considered view that this petition requires to be admitted and that CIRP process is required to be initiated against the Corporate Debtor. The Application/Petition stands admitted in terms of Section 9(5) of IBC, 2016 and the moratorium shall come in to effect as of this date.

Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for alleged default in payment of debt.
2. Dispute over payments for piling works and off-site packages for a petrochemical complex.
3. Respondent's denial of liability and failure to respond to demand notice.
4. Applicability of the Limitation Act, 1963 to the Insolvency and Bankruptcy Code.
5. Adjudication on the Respondent's claims of no amount due, lack of invoice annexation, and alleged breach of contract.

Issue 1: Application under Section 9 of the Insolvency and Bankruptcy Code
The Applicant filed an application against the Respondent company invoking Section 9 of the Insolvency and Bankruptcy Code, 2016, citing default in payment of debt related to piling works and off-site packages for a petrochemical complex. The Respondent admitted a debt but failed to pay the remaining amount, leading to the demand notice and subsequent petition for Corporate Insolvency Resolution Process.

Issue 2: Dispute over Payments
The Applicant claimed that the Respondent did not pay the full amount due for the piling works and off-site packages, despite issuing work orders and job completion certificates. The Respondent foreclosed the works midway, leading to a significant unpaid balance. The Tribunal examined the invoices, payments made, and acknowledgments by the Respondent to determine the debt owed by the Respondent.

Issue 3: Respondent's Denial and Lack of Response
The Respondent denied liability and failed to respond adequately to the demand notice, prompting the Applicant to seek initiation of the Corporate Insolvency Resolution Process. Despite granting time to file a reply, the Respondent did not provide a substantive response, leading to the Tribunal's consideration of the Applicant's claims.

Issue 4: Applicability of the Limitation Act
The Tribunal deliberated on the applicability of the Limitation Act, 1963 to the Insolvency and Bankruptcy Code. The introduction of Section 238A through an ordinance clarified the application of the Limitation Act to proceedings before the Adjudicating Authority. Citing relevant judicial orders, the Tribunal determined that the present application was not time-barred under the Code.

Issue 5: Adjudication on Respondent's Claims
The Tribunal addressed the Respondent's claims of no amount due, lack of invoice annexation, and alleged breach of contract. Finding these claims unsubstantiated and mere assertions in the absence of a proper response, the Tribunal concluded that the Corporate Debtor's default on the debt warranted admission of the petition for Corporate Insolvency Resolution Process.

The Tribunal admitted the application under Section 9(5) of the Insolvency and Bankruptcy Code, appointing an Interim Resolution Professional to oversee the resolution process. The moratorium period was initiated, restricting certain actions against the Respondent. The Tribunal directed the Applicant to pay a specified sum to the Interim Resolution Professional to cover expenses. The order was communicated to relevant parties and authorities for compliance and further action as per the provisions of the Code.

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