2020 (6) TMI 720 - 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 - There has been no communication in reply from the Corporate Debtor to the Demand Notice dated 27.04.2018, in spite of receiving the same by Speed Post. The Demand Notice was also sent by FedEx Courier on 02.05.2018. Affidavit of Service dated 09.12.2019 has been placed on record - In spite of various opportunities given, there was no representation on behalf of the Corporate Debtor. Therefore, it appears that the Corporate Debtor is not interested in contesting the present petition. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC) against a Corporate Debtor for non-payment of dues.

Detailed Analysis:

1. Jurisdiction and Background:
The Company Petition was filed under section 9 of the IBC by an Operational Creditor against a Corporate Debtor for non-payment of a significant sum. The Corporate Debtor is a private company incorporated under the Companies Act, 1956, with jurisdiction falling under the Mumbai Bench.

2. Debt Default and Claim by Operational Creditor:
The Operational Creditor detailed the series of events leading to the debt default by the Corporate Debtor. The Operational Creditor supplied merchandise as per the Corporate Debtor's specifications, invoiced the transactions, and despite reminders, the Corporate Debtor failed to make full payment, resulting in a substantial outstanding amount.

3. Legal Proceedings and Lack of Response:
The Operational Creditor served a Demand Notice to the Corporate Debtor as per the IBC requirements. However, the Corporate Debtor neither replied to the notice nor contested the petition, indicating a lack of interest in the legal proceedings.

4. Admission of Petition and Order for CIRP:
After considering all aspects and lack of response from the Corporate Debtor, the Adjudicating Authority found the petition complete and admitted it. Consequently, the Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor.

5. Moratorium and Appointment of Interim Resolution Professional:
The order included provisions for a moratorium under section 14 of the IBC, restricting various actions against the Corporate Debtor. Additionally, an Interim Resolution Professional (IRP) was appointed to oversee the resolution process and manage the affairs of the Corporate Debtor during the CIRP period.

6. Operational Creditor's Obligations and Communication:
The Operational Creditor was directed to deposit a sum for expenses related to public notices and inviting claims, subject to Committee of Creditors' approval. The IRP was tasked with submitting progress reports to the Adjudicating Authority, ensuring transparency throughout the resolution process.

7. Compliance and Communication Requirements:
The Registry was instructed to communicate the order to all relevant parties promptly. Additionally, compliance reports were mandated to be submitted to ensure proper updating of records and adherence to the legal process.

This detailed analysis highlights the key legal aspects and proceedings of the judgment, emphasizing the initiation of CIRP against the Corporate Debtor due to non-payment issues raised by the Operational Creditor.