2020 (3) TMI 1293 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor committed default in payment of outstanding debt - it is argued that it was not a case simply of outstanding amount only on account of lease rent but amount of electricity charges, diesel, sewer and water charges were also due - Operational debt or not - existence of debt and dispute or not - HELD THAT - Admittedly, in the present case, there are dues of electricity, diesel, sewer and water charges which are undisputed by the Corporate Debtor. The quantum of such claim/debt is also more than ₹ 1 Lac. Diesel has been consumed for providing electricity. Electricity charges are to be reimbursed by the Corporate Debtor based upon its consumption. Similarly, water charges are also to be paid. These activities clearly fall in the definition of provisions of Services as defined in Section 5(21) of IBC, 2016 as the definition in Section 5(21) means a claim in respect of the provision of Services - the contention of the Corporate Debtor that since main services cannot be categorized as operational debt, these will also not construe as operational debt, is rejected - further, no such restriction/condition exists in provisions of Section 5(21) of IBC, 2016, hence, for this reason also, we see no merit in this contention of the Corporate Debtor. Notice u/s 8 of IBC, 2016 has duly been served and acknowledged. The application is otherwise complete and defect-free - application filed by the Operational Creditor under section 9 of the Insolvency Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, Web Date Systems Private Limited, is hereby admitted - moratorium declared.

Summary

Issues Involved:
Initiating Corporate Insolvency Resolution Process under section 9 of Insolvency and Bankruptcy Code, 2016 against the corporate debtor for default in payment of outstanding debt.

Detailed Analysis:

1. Application under Section 9 of IBC, 2016: The application was filed by an Operational Creditor against a Corporate Debtor for default in payment of outstanding debt amounting to ?54,73,536. The debt arose from a lease agreement for a commercial property, with outstanding lease rent and other charges like electricity, diesel, sewer, and water charges. The Operational Creditor provided services falling under the definition of provisions of Services as per Section 5(21) of IBC, 2016. The Corporate Debtor disputed the categorization of these charges as operational debt, citing previous judgments. However, the Tribunal rejected this contention, emphasizing that the charges clearly constituted services and were eligible for consideration as operational debt.

2. Admission of Application: The Tribunal found that the application was complete and defect-free, with proper service of notice under Section 8 of IBC, 2016. As per the provisions, the application was admitted, and a moratorium was declared. The Tribunal ordered the appointment of an Interim Resolution Professional (IRP) from the panel approved by IBBI. The moratorium prohibited various actions against the Corporate Debtor and ensured the continuation of essential goods or services supply during the process.

3. Resolution Process: The Tribunal directed the IRP to ascertain creditors' particulars, convene a Committee of Creditors, and conduct the Corporate Insolvency Resolution Process (CIRP) in a time-bound manner. The Operational Creditor was instructed to pay an advance fee to the IRP as per regulations. The matter was listed for a progress report filing, and the Registry was directed to communicate the order to all concerned parties.

This detailed analysis highlights the key aspects of the judgment, including the grounds for initiating the insolvency resolution process, the admission of the application, the moratorium declared, and the procedural steps to be followed during the resolution process.