2019 (12) TMI 1443 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - HELD THAT - From perusal of the Demand notice and e-mail correspondence between the parties it is seen that there does not exist any pre-existing dispute regarding quality or standard of equipment supplied between the parties. Further there exists no arbitration or any other proceedings between the parties. Therefore this Adjudicating Authority is of the view that there is no pre-existing dispute between the parties. With regard to the dispute now raised as to the quantum of debt amount, this Adjudicating Authority is of the view that dispute as to the quantum of amount of debt does not alter the situation so long as there is any default on the part of the Corporate Debtor and the same is for more than ₹ 100,000/-. It is seen from reply filed by Corporate Debtor that according to Corporate Debtor itself total value of contract was of ₹ 7.2 Crores out of which a sum of ₹ 4.25 Crores only has been paid. Further letter dated 29-12-2016, clearly establishes admission of debt on part of the Corporate Debtor. That there is a default on the part of the Corporate Debtor is also clear from a perusal of the correspondence between the Operational Creditor and Corporate Debtor including the MoU dated 24-10-2013 and the two letters of the Corporate Debtor dated 9-8-2016 29-12-2016. Since the letters dated 9-8-2016 and 29-12-2016 establish a clear acknowledgement of debt on the part of the Corporate Debtor, Section 18 of the Limitation Act will be applicable in this case and the instant application is held to have been filed within limitation. Therefore this Adjudicating Authority is inclined to admit the instant petition. The instant petition is hereby admitted and this Adjudicating Authority order commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within the timelines provided u/s. 12 of the IBC, 2016, reckoning from the day this order is passed - application admitted - moratorium declared.

Summary

Issues:
- Interpretation of section 9 of the Insolvency and Bankruptcy Code, 2016
- Dispute regarding the quantum of debt amount
- Existence of pre-existing dispute between the parties
- Admission of debt by the Corporate Debtor

Analysis:

Interpretation of section 9 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal considered a Company Petition filed under section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor against a Corporate Debtor. The Operational Creditor alleged non-payment of debt by the Corporate Debtor, amounting to ?9,32,93,528.82. The Corporate Debtor disputed the quantum of the claim, arguing that the debt was not due and payable. The Tribunal analyzed the correspondence between the parties and noted an admission of debt by the Corporate Debtor in various communications. The Tribunal found that there was a default on the part of the Corporate Debtor, leading to the application being held as filed within the limitation period. Consequently, the Tribunal admitted the petition and ordered the commencement of the Corporate Insolvency Resolution Process.

Dispute regarding the quantum of debt amount:
The Corporate Debtor contested the claimed amount, asserting that the Operational Creditor's figure was imaginary and lacked sufficient proof of pending dues. However, the Tribunal observed that the Corporate Debtor had acknowledged the debt in previous communications, supporting the Operational Creditor's claim. The Tribunal determined that the dispute over the quantum of the debt did not negate the existence of default by the Corporate Debtor, and the application was admitted based on the admitted debt and default.

Existence of pre-existing dispute between the parties:
The Tribunal examined the documents and correspondence between the parties but found no pre-existing dispute regarding the quality or standard of the equipment supplied. Additionally, there were no ongoing arbitration or other proceedings between the parties. Consequently, the Tribunal concluded that there was no pre-existing dispute that would prevent the admission of the petition under section 9 of the Insolvency and Bankruptcy Code.

Admission of debt by the Corporate Debtor:
The Tribunal highlighted instances where the Corporate Debtor had admitted to the debt in various letters and communications with the Operational Creditor. Notably, the Corporate Debtor acknowledged the pending payments and expressed intentions to clear the dues once certain conditions were met. These admissions, coupled with the history of correspondence and acknowledgments, led the Tribunal to accept the existence of the debt and default on the part of the Corporate Debtor, justifying the admission of the petition and initiation of the insolvency resolution process.

In conclusion, the Tribunal admitted the Company Petition under section 9 of the Insolvency and Bankruptcy Code, 2016, based on the default by the Corporate Debtor, acknowledgment of debt, and lack of pre-existing disputes. The Tribunal appointed an Insolvency Resolution Professional and declared a moratorium, initiating the resolution process in accordance with the statutory provisions.