2020 (8) TMI 865 - Tri - Insolvency and Bankruptcy

Maintaiability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - Existence of debt and dispute or not - Corporate Debtor deliberately failed and neglected to pay legally enforceable debt - service of demand notice - HELD THAT - This Bench on examination, finds that the Demand Notice dated 10.09.2018 has been duly served through registered post by the Petitioner at 604, Kaushal point, 4th floor, behind Uday cinema, Ghatkopar (W), Mumbai. A proof of delivery by way of acknowledgment card has been attached by the Petitioner with his Petition. That it is the correct address for delivery of Demand Notice is borne out by the fact this address is mentioned as the Registered address of the Corporate Debtor company even in their Annual Report of 2018-2019. This Bench, therefore, has no doubt that the Demand Notice was duly served upon the Corporate Debtor and it chose not to contest it. The Corporate Debtor has not been able to produce a single piece of paper which points towards it raising any dispute regarding the transactions, invoices or the amount payable.This Bench has no doubt that at least an amount of ₹ 90,49,843/- is a liability which is due from Risa International Limited and qualifies as Operational Debt both in terms of Section 3(11) and Section 5(21) of the IBC, 2016 - Application under sub-section (2) of Section 9 of I B Code, 2016 filed by the Operational Creditor for initiation of CIRP in prescribed Form5, as per the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is complete. The existing operational debt beyond the threshold limit against the Corporate Debtor and its default is also proved. The application filed under section 9 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the Corporate Debtor deserves to be admitted - Application admitted - moratorium declared.

Summary

Issues Involved:
1. Existence of debt and default.
2. Service of demand notice.
3. Dispute regarding invoices and delivery challans.
4. Calculation of interest under MSME Act.
5. Appointment of Interim Resolution Professional (IRP).
6. Declaration of moratorium.

Detailed Analysis:

1. Existence of Debt and Default:
The Petitioner, Tanaya Enterprises Pvt. Ltd., claimed a principal amount of ?90,49,843/- from the Corporate Debtor, Risa International Ltd., plus interest under the MSME Act, 2006. The Petitioner supplied goods worth ?47,35,79,752/- to the Corporate Debtor between September 2013 and October 2014, and the Corporate Debtor acknowledged the delivery. Despite partial payments, an outstanding debt of ?90,49,843/- remained. The Tribunal found that the debt and default were established as the Corporate Debtor did not dispute the transactions or the amount payable.

2. Service of Demand Notice:
The Corporate Debtor contended that the demand notice dated 10.09.2018 was not served upon them but rather on a Chartered Accountants Firm. The Tribunal found that the demand notice was duly served through registered post at the correct address, as confirmed by the Corporate Debtor's annual report. The Corporate Debtor failed to contest the notice, leading the Tribunal to conclude that the demand notice was properly served.

3. Dispute Regarding Invoices and Delivery Challans:
The Corporate Debtor denied the authenticity of the invoices and delivery challans, alleging they were false and fabricated. However, the Tribunal noted that the invoices and delivery challans were duly acknowledged by the Corporate Debtor with their stamp. The Tribunal dismissed the Corporate Debtor's contentions as baseless and unsupported by any evidence.

4. Calculation of Interest Under MSME Act:
The Petitioner claimed ?1,77,11,546/- in the demand notice, including interest as per the MSME Act. The Tribunal, while not delving into the exact interest calculation, affirmed that the Petitioner was entitled to claim interest on the principal amount due, in line with Section 16 of the MSME Act, which mandates compound interest with monthly rests at three times the bank rate notified by the Reserve Bank.

5. Appointment of Interim Resolution Professional (IRP):
The Petitioner proposed Mr. Sanjiv Kumar Arora as the Interim Resolution Professional. The Tribunal accepted the proposal, appointing Mr. Arora with Registration Number [IBBI/IPA-001/IP-P01462/2018-19/12390] to carry out the functions of IRP as per the Insolvency and Bankruptcy Code (IBC).

6. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the IBC, prohibiting:
a) Institution or continuation of suits or proceedings against the Corporate Debtor.
b) Transfer, encumbrance, or disposal of the Corporate Debtor's assets.
c) Foreclosure or enforcement of security interests.
d) Recovery of any property occupied by the Corporate Debtor.
The supply of essential goods or services to the Corporate Debtor was to continue uninterrupted. The moratorium would be effective until the completion of the Corporate Insolvency Resolution Process (CIRP) or approval of a resolution plan.

Conclusion:
The Tribunal admitted the application under Section 9 of the IBC, initiating the CIRP against the Corporate Debtor. The moratorium was declared, and the IRP was appointed to proceed with the resolution process. The commencement of the CIRP was effective from the date of the order.