2019 (8) TMI 1493 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - Since it is apparent on record that the Corporate Debtor availed services of the Operational Creditor by using their land and not paying rent as agreed between them, this Operational Creditor has proved the existence of debt and default and the Corporate Debtor has not raised any dispute between the parties in relation to the payment of rent to the Operational Creditor. Petition admitted - moratorium declared.

Summary

Issues:
Initiation of Corporate Insolvency and Resolution Process based on default in rental payments.

Analysis:
The judgment pertains to a Company Petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency and Resolution Process (CIRP) against the Corporate Debtor due to default in paying rent amounting to ?6,85,327 as of 09.04.2018. The Operational Creditor leased its property to the Corporate Debtor, who failed to pay the rentals, leading to the filing of the petition. The debt outstanding against the Corporate Debtor for rentals is meticulously detailed in the petition, supported by an email acknowledging the amount due. The Operational Creditor also issued a Section 8 notice demanding payment, which went unanswered by the Corporate Debtor, further solidifying the claim.

The Tribunal, after considering the submissions of both parties, found that the Operational Creditor had substantiated the existence of the debt and default by providing evidence of the rental arrears and the Corporate Debtor's failure to dispute the payment. Consequently, the Tribunal admitted the Company Petition and appointed an Interim Resolution Professional (IRP) to oversee the insolvency resolution process. The Tribunal declared a moratorium, prohibiting various actions against the Corporate Debtor, ensuring the continuity of essential goods or services supply, and specified the duration of the moratorium until the completion of the resolution process or liquidation, as per the Code's provisions. The public announcement of the Corporate Insolvency Resolution Process was also mandated, and the IRP was appointed with specific functions to manage the resolution process effectively.

In conclusion, the Tribunal admitted the petition, imposed a moratorium, appointed an IRP, and issued necessary directions to facilitate the Corporate Insolvency Resolution Process in accordance with the Insolvency and Bankruptcy Code, 2016. The judgment underscores the importance of adhering to contractual obligations and the legal recourse available in cases of default, emphasizing the significance of due process in insolvency proceedings.