2019 (9) TMI 1503 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues or not - legal entity or not - status of the petitioner, registered partnership firm or not - service of demand notice - existence of default or dispute or not - forged and fabricated documents for the purpose of filing of present claim. Legal Entity or not - HELD THAT - It is evident from a perusal of copy of partnership deed dated May 6, 2005 and Form B under rule 8 of the Delhi Partnership (Registration of Firms) Rules, 1972 that petitioner is a partnership firm duly registered with the Registrar of Firms, Delhi. Service of demand notice - compliance with the mandatory provisions of section 9(5)(ii)(c) of the Code or not - HELD THAT - According to section 27 of the General Clauses Act and section 20 of the Companies Act, 2013 read with rule 35 of the Companies (Incorporation) Rules, 2014 the service has to be effected on the registered office address and that has been done. Therefore, the argument lacks substance and the same is hereby rejected. Forged documents - Part II, clause 6 of the application has been intentionally left blank by the petitioner - HELD THAT - This objection also does not survive in light of the board resolution dated November 27, 2018 filed along with the petition authorizing Mr. Ajay Bhatjiwale, general manager to be the authorized representative of the form - It is patent from a perusal of the invoices and the delivery challans that the corporate debtor had acknowledged the receipts of goods from the petitioner firm. Existence of default or not - HELD THAT - There is no escape from the conclusion that corporate debtor has committed default and the amount of ₹ 61,24,637 as shown to be the closing balance for the financial year April 1, 2017 to August 31, 2018 has remained unpaid. Thus, default has been committed by the corporate debtor within the meaning of section 3(12) read with section 4 and section 9(1) of the Code, 2016. Name of IRP not mentioned - HELD THAT - The Insolvency and Bankruptcy Board of India (IBBI) has recommended a panel of insolvency professionals for appointment as insolvency resolution professionals for the period July 1, 2019 to December 31, 2019 in compliance with section 16(3)(a) of the Code in order to avoid delay. The list of recommended insolvency professionals provides instant solution to the National Company Law Tribunal-Adjudicating Authority to pick up the name and appoint anyone. It also helps in meeting the time lines given in the Code and save unnecessary wastage of time in asking the Insolvency and Bankruptcy Board of India to recommend the name and then to appoint such interim resolution professional by the National Company Law Tribunal-Adjudicating Authority - Mr. Punkaj Jain, is appointed as an interim resolution professional. The petition admitted - moratorium declared.

Summary

Issues Involved:
1. Maintainability of the petition by the petitioner.
2. Status and registration of the petitioner as a legal entity.
3. Validity of the demand notice and its service.
4. Existence of disputes regarding the operational debt.
5. Allegations of forged and fabricated documents.
6. Appointment of the interim resolution professional.
7. Declaration of moratorium and its implications.

Detailed Analysis:

1. Maintainability of the Petition:
The corporate debtor contested the maintainability of the petition, arguing that the petitioner, Unimax International, is not a legal entity under sections 3(23) and 5(20) of the Insolvency and Bankruptcy Code, 2016 (the Code). However, the tribunal found that the petitioner is a duly registered partnership firm, as evidenced by the partnership deed dated May 6, 2005, and Form B under rule 8 of the Delhi Partnership (Registration of Firms) Rules, 1972. Therefore, the petition was deemed maintainable.

2. Status and Registration of the Petitioner:
The corporate debtor questioned the petitioner's status, claiming it was unclear whether it was a registered partnership firm. The petitioner provided a true copy of the partnership deed and registration details, confirming its status as a registered partnership firm. The tribunal accepted this evidence, dismissing the corporate debtor's objections.

3. Validity of the Demand Notice and Its Service:
The corporate debtor argued that the demand notice was defective and not properly served. The tribunal noted that the demand notice was sent to the registered office address as per the MCA records, which is compliant with section 27 of the General Clauses Act and section 20 of the Companies Act, 2013. The tribunal rejected the argument, stating that service was correctly effected on the registered office address.

4. Existence of Disputes Regarding the Operational Debt:
The corporate debtor claimed that disputes existed regarding the quality of supplies and that payments had been made in full and final settlement. The tribunal found that the corporate debtor had issued cheques amounting to ?6,00,000, which were dishonoured, indicating that the debt was not settled. The tribunal also noted that the operational creditor had supplied goods as per the invoices and delivery challans, establishing the existence of operational debt under section 5(21) of the Code.

5. Allegations of Forged and Fabricated Documents:
The corporate debtor alleged that the petitioner relied on forged and fabricated documents. The tribunal did not find sufficient evidence to support these allegations. It was noted that the operational creditor had provided necessary documents, including an amended affidavit under section 9(3)(b) of the Code, confirming no dispute was raised by the corporate debtor after receiving the notice.

6. Appointment of the Interim Resolution Professional:
The petitioner did not propose an interim resolution professional, leaving it to the tribunal's discretion. The tribunal appointed Mr. Punkaj Jain as the interim resolution professional, as recommended by the Insolvency and Bankruptcy Board of India (IBBI). The tribunal directed him to file his written communication and perform his duties as per the Code.

7. Declaration of Moratorium and Its Implications:
The tribunal declared a moratorium under section 14 of the Code, imposing prohibitions on suits, asset transfers, foreclosure actions, and recovery of property. The tribunal clarified that the moratorium does not apply to transactions notified by the Central Government or a surety in a contract of guarantor to a corporate debtor. Essential supplies like water and electricity must not be terminated during the moratorium period.

Conclusion:
The tribunal admitted the petition, appointed an interim resolution professional, and declared a moratorium. It directed the operational creditor to deposit ?2 lakhs with the interim resolution professional for expenses and instructed the ex-management to provide necessary documents and information. The tribunal emphasized the importance of fairness and integrity in the corporate insolvency resolution process.