2019 (8) TMI 1550 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - existence of debt and dispute or not - HELD THAT - It is evident from the record of the Corporate Debtor that though the Corporate Debtor appeared before this Bench several times, the Corporate Debtor has not come forward with any defence stating that dispute is existing in respect to the payment payable to the Operational Creditor. The Corporate Debtor has not even filed reply or written submissions raising defence against the claim made by the Operational Creditor - Since it is an advance payment made by the Operational Creditor towards supply of sugar (goods) from the Corporate Debtor, it is to be construed as 'operational debt' relating to supply of goods, therefore, considering this claim as operational debt and there being no dispute in between the parties in respect to debt and default, this company petition is admitted by appointing Mr. Ajay S. Jain as IRP with a further direction to this Operational Creditor to pay remuneration of the IRP as well as other expenditure the IIRP incurs in discharging his/her duties until COC has been constituted by the IRP. Application admitted - moratorium declared.

Summary

Issues:
Insolvency and Bankruptcy Application (IBA) under Section 9 of the Insolvency & Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process (CIRP) due to non-payment by the Corporate Debtor.

Analysis:
The Operational Creditor, M/S. Christy Friedgram Industry, filed an IBA against the Corporate Debtor for failing to pay a substantial amount for the supply of sugar. The Operational Creditor issued a purchase order and made an advance payment to the Corporate Debtor. Despite acknowledging the receipt of the advance, the Corporate Debtor did not supply the sugar as agreed upon. Subsequently, the Corporate Debtor sent post-dated cheques for the refund, which were dishonored due to insufficient funds. The Operational Creditor then issued a section 8 notice demanding payment, followed by the IBA under Section 9 of the IBC.

The Corporate Debtor failed to provide any defense or dispute the claim made by the Operational Creditor, even after appearing before the Bench multiple times. As there was no existing dispute regarding the debt and default, the claim was considered as operational debt related to the supply of goods. The Tribunal admitted the company petition, appointed an Interim Resolution Professional (IRP), and directed the Operational Creditor to pay the IRP's remuneration and expenses until the Committee of Creditors (COC) is constituted.

The Tribunal declared a moratorium, prohibiting various actions against the Corporate Debtor, ensuring the supply of essential goods or services, and specifying the effect and duration of the moratorium until the completion of the CIRP process. The public announcement of the Corporate Insolvency Resolution Process was mandated, and Mr. Ajay S. Jain was appointed as the Interim Resolution Professional to oversee the proceedings.

The Registry was directed to communicate the order to the Operational Creditor, Corporate Debtor, and the Interim Resolution Professional promptly via email. The judgment highlighted the legal steps taken to address the non-payment issue and initiate the CIRP process under the Insolvency & Bankruptcy Code, emphasizing the importance of adherence to legal procedures and timelines in such cases.