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2019 (11) TMI 1487 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - The Corporate Debtor was directed to file Audited Financial statements for the Financial year from 2015-16 to 2018-19. After verifying the statements it was clearly evident from the 'Notes to the Financial statements', in the head 'trade payables' as on 31.03.2017 no due amount is shown towards the Operational Creditor. However as on 31st March 2018, it appears that an amount of Rs. 2,96,57,794/- in the name of Roxcel Handel MBH is due. It is also evident from the Trade payables' as on 31.03.2019 an amount of ₹ 91,05,994 is still due to the Operational Creditor. This indicates the averment made by the Corporate Debtor that they have made advance payments for the supplies is not supported by any evidence. After perusal of case record, it is established that i. The operational debt due to pay exceeds ₹ 1 Lakh ii. The documentary evidence furnished shows that the aforesaid debt is due and not paid till date. iii. There is no proof of existence of any earlier dispute between parties or arbitration proceedings filed before the Competent Authority. Since all the requisite conditions are fulfilled in the instant case, the application submitted by operational Creditor is Complete in all respects and there is no defect pointed out by Corporate Debtor - As such the instant Application deserves to be admitted. Application admitted - moratorium declared.
Issues Involved:
1. Validity of the operational debt and its amount. 2. Dispute regarding the quality of goods supplied. 3. Apportionment of payments between two entities. 4. Non-communication of the transfer of rights and obligations. 5. Admissibility of bank statements as proof of payment. 6. Interim order and its implications. 7. Compliance with Section 9 of the Insolvency & Bankruptcy Code, 2016. Issue-wise Detailed Analysis: 1. Validity of the Operational Debt and its Amount: The Operational Creditor, M/s. Roxcel Trading GmbH, claimed an outstanding debt of USD 10,12,207.21 along with interest, converted to INR 7,64,54,285.20, from the Corporate Debtor, M/s. NUI Pulp and Paper Industries Private Limited. The debt originated from undisputed invoices for the supply of cup stock baseboard. Despite reminders and a demand notice, the Corporate Debtor failed to clear the dues, leading to the filing of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016. 2. Dispute Regarding the Quality of Goods Supplied: The Corporate Debtor raised issues regarding the quality of goods supplied but the Operational Creditor clarified that the application pertained only to undisputed invoices. The Tribunal noted that the Corporate Debtor had benefited from the goods supplied and had not raised quality issues at the time of receipt. 3. Apportionment of Payments Between Two Entities: The Corporate Debtor argued that payments made were wrongly apportioned between them and another entity, MATHEEL. The Operational Creditor provided email correspondences indicating that the apportionment was communicated and not objected to by the Corporate Debtor. The Tribunal found that the Corporate Debtor's objections were an afterthought and upheld the apportionment practice as a prevailing business practice between the parties. 4. Non-Communication of the Transfer of Rights and Obligations: The Corporate Debtor contended that they were not informed about the transfer of rights and obligations from Roxcel Handelsgesellschaft MBH to Roxcel Trading GmbH. The Tribunal found that the Corporate Debtor had corresponded with the new entity regarding supplies and dues, thus they could not claim ignorance of the transfer. 5. Admissibility of Bank Statements as Proof of Payment: The Operational Creditor challenged the bank statements provided by the Corporate Debtor as proof of payment, stating they lacked proper attestation and completeness. The Tribunal agreed, noting that the statements did not meet the criteria for proof of payment and were incomplete. 6. Interim Order and Its Implications: An interim order was issued by the NCLT, Chennai Bench, restraining the Corporate Debtor from alienating or encumbering its assets. This order was upheld by the NCLAT and the Supreme Court. The Tribunal noted that the interim order was necessary to protect the interests of the Operational Creditor until the application was admitted or rejected. 7. Compliance with Section 9 of the Insolvency & Bankruptcy Code, 2016: The Tribunal examined the application based on the criteria established in the "Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited" case. It found that: - The operational debt exceeded ?1 lakh. - The debt was due and unpaid. - There was no pre-existing dispute or arbitration proceeding related to the debt. Since all conditions were met, the Tribunal admitted the application and declared a moratorium, prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor. The Tribunal appointed an Interim Resolution Professional to carry out the insolvency resolution process and directed immediate communication of the order to relevant parties. Conclusion: The Tribunal admitted the application filed by the Operational Creditor, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor, and declared a moratorium in accordance with Section 14(1) of the Insolvency & Bankruptcy Code, 2016.
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