2021 (8) TMI 1245 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dispute - Operational Creditors - existence of debt and dispute or not - Whether or not, a Letter communicating requirement of reconciliation can be said to be raising of a dispute? - HELD THAT - The Appellant/Promoters/Directors of the Corporate Debtor are directed to handover the assets and records of the Corporate Debtor to the Interim Resolution Professional immediately (if not yet handed over). The Interim Resolution Professional / RP will make effort that the Company remains a going concern and will take assistance of the (suspended) Board of Directors and the officers/Director/Employees. The persons who are working will, at present continue to perform their duties, including the paid Directors. The person who is authorized to sign the bank cheques may sign cheques only after authorization of the Interim Resolution Professional with counter signature of the Interim Resolution Professional / RP at the back side of the cheques. List the Appeal For Admission (After Notice) Hearing on 07th October, 2021.

Summary

Issues: Preexisting dispute, stay of CIRP, interim relief, corporate debtor's assets handover, operation of bank accounts, filing of reply-affidavits, admission hearing date

In this judgment by the National Company Law Appellate Tribunal, the appellant's counsel argued for a stay on the Corporate Insolvency Resolution Process (CIRP) due to a preexisting dispute, citing a letter as evidence. However, the tribunal noted that the Interim Resolution Professional (IRP) had not been made a respondent and directed the appellant to include the Corporate Debtor through IRP as Respondent No. 2. The tribunal ordered the handover of the corporate debtor's assets and records to the IRP immediately if not done already, emphasizing the need for the company to remain a going concern. The IRP was authorized to operate the company's bank accounts for day-to-day functions like bill payments and employee salaries, subject to certain conditions. The respondents were given a deadline to file reply-affidavits and brief written submissions, with an admission hearing scheduled for a specific date. The tribunal declined to grant interim relief, highlighting the time-bound nature of procedures under the Insolvency and Bankruptcy Code (IBC) and the importance of avoiding delays that could undermine the IBC's objectives. It was emphasized that the decision on whether a letter requesting reconciliation constitutes a dispute needed further examination. The tribunal's order aimed to ensure the smooth functioning of the company under the supervision of the IRP and involved various procedural directions for the parties involved in the appeal.