2019 (3) TMI 1786 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of dispute within the meaning of Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016 or not - HELD THAT - The records available shows that the amount due to the Applicant from the Respondent is in respect of supply of goods. Therefore, the amount claimed by the Applicant from the Respondent is operational debt within the meaning of section 5, sub-section (21) of the Code. The operational debt is due to the Applicant. Therefore, Applicant is an Operational Creditor within the meaning of sub-section (5) of section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default - That, amount is due from the Respondent to the Applicant. Respondent is a Company registered under the Companies Act. Therefore, Respondent is a Corporate Debtor within the meaning of sub-section (8) of section 3 of the Code. The Application filed by the Applicant is complete in all respects - on the basis of material available on record it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - Petition deserves to be admitted. Petition admitted - Moratorium declared.

Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Quality dispute regarding supplied goods.
3. Operational debt and default occurrence.
4. Corporate debtor's response and existence of dispute.
5. Completeness of the application and appointment of Interim Insolvency Resolution Professional.
6. Initiation of Insolvency Resolution Process and moratorium declaration.

Analysis:

1. The application was filed by an operational creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016. The applicant, a limited company engaged in the business of manufacturing and supplying chemicals, claimed a debt of ?18,16,161.60 from the corporate debtor for the supply of goods. The applicant provided detailed information regarding the debt, including the invoice and relevant documents supporting the claim.

2. A quality dispute arose between the parties regarding the supplied goods. The corporate debtor raised allegations of quality issues after consuming the material supplied by the applicant. However, the applicant contended that the material was supplied as per standard technical specifications and that the corporate debtor's complaints were unfounded. The tribunal found that the dispute raised by the corporate debtor lacked merit and appeared to be an afterthought to avoid payment.

3. The tribunal determined that the amount claimed by the applicant constituted operational debt under the Code. It was established that there was a debt due to the applicant from the respondent, who was a registered company under the Companies Act, thus qualifying as a corporate debtor. The records confirmed the occurrence of default, leading to the initiation of the Insolvency Resolution Process.

4. Despite the corporate debtor's claims of quality issues and the existence of a dispute, the tribunal found that the applicant had fulfilled all requirements for the application. The respondent's objections were deemed unsubstantiated, and the tribunal appointed an Interim Insolvency Resolution Professional to oversee the process.

5. The tribunal admitted the application, appointing the Interim Insolvency Resolution Professional and declaring a moratorium to prohibit certain actions against the corporate debtor. The moratorium aimed to facilitate the resolution process and protect the interests of all parties involved. The order also emphasized the continuation of essential services to the corporate debtor during the moratorium period.

6. The tribunal's decision to admit the petition and initiate the Insolvency Resolution Process signified the commencement of formal proceedings to address the debt dispute between the parties. The communication of the order to all relevant parties ensured transparency and compliance with the legal process, concluding the matter without costs imposed on either party.

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