2020 (2) TMI 1425 - 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 - time limitation - HELD THAT - The corporate debtor has tried to create and establish a preexisting dispute by asserting the sub standard quality and overpricing of air conditioners which was raised only after notice under section 8 of IBC was issued, without any supporting evidence. The corporate debtor has not placed on record any document which exhibits the plausible dispute between the parties. It can be thus inferred that there is no merit in the so-called dispute raised by the corporate debtor in reply to this application. This leaves no doubt that the default has occurred with respect to the payment of the operational debt of the applicant. Thus mere reply filed by the corporate debtor to the present application, is unable to establish any pre-existing dispute of genuine nature and the said is merely a moonshine dispute - The date of default occurred from 13-10-2018 and the present application is filed on 4-9-2019. Hence the application is not time barred and filed within the period of limitation. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - It is pertinent to note that the corporate debtor has not placed on record any correspondences between the parties with respect to any disputes raised by the corporate debtor. The Applicant has filed an affidavit under section 9(3) (b) affirming that the corporate debtor has not raised any pre-existing dispute as regards the amount of operational debt claimed by the applicant. Further, it is submitted that the statutorily prescribed time period for replying to the demand notice is 10 days, the counsel for corporate debtor belatedly issued a reply dated 4-6-2019 whereby they raised false and frivolous contents which were not pre existing at the time of issuance of Demand Notice dated 18-5-2019 and despite the delay of 10 days from the date of service of demand notice the corporate debtor has failed to show pendency of proceedings related to the said debt or any pre-existing dispute - The present application is filed on the Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 9 of the code and is complete. The default has occurred of the debt which is due and payable since 13-10-2018, Therefore, the applicant is entitled to claim its dues, establishing the default in payment of the operational debt. Hence, the application is admitted. Application admitted - moratorium declared.

Summary

Issues involved:
- Application filed under section 9 of Insolvency and Bankruptcy Code, 2016 by Applicant against Corporate Debtor.
- Dispute over outstanding payment for air conditioners supplied by Applicant to Corporate Debtor.
- Corporate Debtor's contention of substandard quality and overpricing of products.
- Allegation of default in payment by Corporate Debtor.
- Jurisdiction of the Tribunal to entertain the application.
- Assessment of pre-existing dispute raised by Corporate Debtor.
- Timeliness of the application.
- Appointment of Interim Resolution Professional.
- Direction for Operational Creditor to deposit funds with IRP.
- Imposition of moratorium on Corporate Debtor.

Analysis:

1. The Applicant, a private limited company, filed an application under section 9 of the IBC, 2016 seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, also a private limited company. The dispute arose from the non-payment of outstanding invoices for air conditioners supplied by the Applicant to the Corporate Debtor.

2. The Applicant contended that despite supplying products as per specifications and terms of purchase orders, the Corporate Debtor failed to make full payment, leading to a total outstanding amount of ?10,15,392/-. The Corporate Debtor disputed the claim, alleging substandard quality and overpricing of the products, and claimed adjustments for unsold machinery and other alleged discrepancies.

3. The Tribunal observed that the Corporate Debtor failed to provide evidence supporting its dispute, leading to the conclusion that the default in payment had indeed occurred. The Tribunal found no merit in the Corporate Debtor's contentions, citing the absence of any genuine pre-existing dispute and referencing the "Mobilox Innovations" case to support its decision.

4. The Tribunal determined that the application was not time-barred, as the default occurred on 13-10-2018, and the application was filed on 4-9-2019. Additionally, since the registered office of the Corporate Debtor was in Delhi, the Tribunal had jurisdiction to entertain the application.

5. The Tribunal admitted the application, appointed an Interim Resolution Professional, and directed the Operational Creditor to deposit funds to meet expenses related to the resolution process. The imposition of a moratorium on the Corporate Debtor was also ordered, in accordance with the provisions of the IBC, 2016.

6. The Tribunal emphasized compliance requirements, including communication of the order to the parties involved, the IRP, IBBI, and ROC for necessary updates and records. The Applicant was instructed to provide a copy of the order to the IRP and ensure compliance with reporting obligations to the Registrar, NCLT.

This detailed analysis covers the various issues addressed in the judgment, highlighting the legal and procedural aspects of the case.