2019 (8) TMI 1608 - 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 - It is evident from the record that the Operational Creditor has been persistently demanding for his dues to be paid however no reply or objection was made or raised by the Corporate Debtor on the prior occasions of demand by the Operational Creditor. The Corporate Debtor did not reply or object to the Demand Letter dated 06.12.2017 - The Corporate Debtor had various opportunities to raise such disputes however it is only at the belated stage that he is raising dispute that man power was not deployed. Had that been the case the Corporate Debtor would not have made further payments to the Operational Creditor. If the Corporate Debtor had any dispute about the claim he ought to have replied to the Statutory Demand Notice. It is not denied by the Corporate Debtor that the Demand Notice was not received by the Corporate Debtor moreover there is record to show that the Demand Notice has been received by the Corporate Debtor - The Operational Creditor has proved the debt as well as its default by the Corporate Debtor. Notice under Section 8 of I B Code has also been sent by the Operational Creditor and received by the Corporate Debtor. The Operational Creditor has filed one Affidavit stating that he did not receive any dispute from the Corporate Debtor before filing this claim. Application admitted - moratorium declared.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor based on outstanding dues.

Analysis:
1. The Applicant filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor due to non-payment of &8377; 9,86,634 for works carried out as per a work order. The Applicant alleged that despite raising running account bills, the Corporate Debtor only paid a partial amount, leaving a substantial outstanding sum.

2. The Corporate Debtor, in response, raised disputes regarding the quality of work performed by the Operational Creditor, alleging delays and deficiencies. The Corporate Debtor claimed that additional costs were incurred due to the Operational Creditor's alleged failure to complete the work satisfactorily, leading to the engagement of another contractor to finish the pending work.

3. The Tribunal noted that the Corporate Debtor did not appear for hearings and that the reply filed by the Corporate Debtor was not notarized. Despite the Corporate Debtor's contentions about inadequate manpower deployment, the bills were acknowledged, and payments were made post the alleged deficiency in work.

4. The Tribunal observed that the Operational Creditor persistently demanded payment, and the Corporate Debtor did not raise objections or disputes earlier. The Corporate Debtor's belated dispute about manpower deployment was deemed untenable as payments were made post the alleged deficiency.

5. The Tribunal found that the Operational Creditor had proven the debt and default by the Corporate Debtor. The Corporate Debtor failed to respond to the Demand Notice and did not dispute the claim before the Tribunal. Hence, the Tribunal admitted the application and declared a moratorium, initiating the Corporate Insolvency Resolution Process.

6. The Tribunal appointed an Interim Resolution Professional, declared a moratorium on certain actions against the Corporate Debtor, and directed the Operational Creditor to deposit a sum in the ESCROW Account. The Interim Resolution Professional was tasked with convening a Committee of Creditors and identifying a Resolution Applicant within a specified timeframe.

7. The Tribunal directed the Registry to communicate the order to all relevant parties and scheduled a follow-up date for filing a progress report. Certified copies of the order were to be issued upon compliance with formalities by concerned parties.