2018 (12) TMI 1936 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - In view of lack of response by way of payment of the amount claimed in default or notice of dispute being issued to the Operational Creditor on the part of the Corporate Debtor, the present application has been preferred under Section 9 of IBC, 2016 read along with attendant rules seeking for the initiation of Corporate insolvency Resolution Process (CIRP) as against the Corporate Debtor wherein an amount of debt in a sum of ₹ 33,44,351/- is claimed as the amount in default which became due and payable after the expiry of 7 days from the date of the respective invoices. Vide order dated 05.06.2018 it is seen that upon service of the notice of the Application, the Corporate Debtor is being represented by Mr. Rahul Sharma, Advocate. It is seen vide order dated 24.07.2018 the liabilities are been admitted by the Corporate Debtor and hence no reply is filed. Under the circumstances of further non-appearance of Corporate Debtor vide order dated 12.10.2018, this Tribunal was constrained to proceed with the matter exparte in relation to the Corporate Debtor - That the Operational Creditor has filed an affidavit along with the petition as mandated under section 9 (3) (b) of the Insolvency and Bankruptcy Code, 2016 thereby submitting that a demand notice U/s 8(1) of the IBC, 2016 dated 19.03.2018 to which no reply was received raising any dispute of the unpaid operational debt and no payment towards the outstanding debt has been received by the Operational Creditor. The Corporate Debtor accepted the liabilities and a default of debt due to the Operational Creditor is also in existence remaining unsatisfied as evident prima facie, this Tribunal is of the considered view that this petition requires to be admitted and that CIRP process is required to be initiated against the Corporate Debtor - the Application/ Petition stands admitted in terms of Section 9(5) of IBC, 2016 and the moratorium shall come in to effect as of this date - Application allowed.

Summary

Issues:
1. Application under Section 9 of Insolvency and Bankruptcy Code, 2016 by Operational Creditor against Corporate Debtor for outstanding payment.
2. Admittance of liabilities by Corporate Debtor without filing a reply.
3. Initiation of Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor.
4. Appointment of Interim Resolution Professional.
5. Imposition of moratorium as per Section 14(1) of IBC, 2016.

Issue 1: Application under Section 9 of IBC, 2016
The Operational Creditor, a multiplex company, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor, a private limited company, for non-payment of an amount due. The Corporate Debtor had ordered the screening of a commercial at the multiplexes of the Operational Creditor, resulting in an outstanding amount of ?33,44,035. The Operational Creditor had issued demand notices and emails to the Corporate Debtor regarding the unpaid debt, which remained unresolved. The Corporate Debtor issued dishonored cheques due to insufficient funds, leading to the petition seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.

Issue 2: Admittance of Liabilities by Corporate Debtor
Upon service of the petition, the Corporate Debtor, represented by an advocate, admitted the liabilities without filing a reply. Despite multiple notices and demand letters, the Corporate Debtor failed to respond adequately, leading to the Tribunal proceeding ex parte due to the non-appearance of the Corporate Debtor. The Operational Creditor submitted an affidavit as required under the IBC, stating that no reply disputing the unpaid operational debt was received, and no payment towards the outstanding debt was made by the Corporate Debtor.

Issue 3: Initiation of CIRP against Corporate Debtor
Considering the lack of response from the Corporate Debtor and the existence of admitted liabilities and default in debt payment, the Tribunal deemed it necessary to admit the petition and initiate the Corporate Insolvency Resolution Process against the Corporate Debtor. An Interim Resolution Professional was appointed by the Tribunal based on the list provided by the Insolvency and Bankruptcy Board of India, and a moratorium was imposed as per Section 14(1) of the IBC, 2016, preventing certain actions against the Corporate Debtor during the resolution process.

Issue 4: Appointment of Interim Resolution Professional
As the Operational Creditor did not name an Insolvency Resolution Professional, the Tribunal appointed Mr. AnoopRumar Goyal as the Interim Resolution Professional, subject to certain conditions and disclosures as required under the IBBI Regulations. The Tribunal directed the Applicant to pay a sum to the Interim Resolution Professional to cover expenses for performing the assigned functions in accordance with the regulations.

Issue 5: Imposition of Moratorium
Upon the admission of the petition, the moratorium came into effect as of the date of the order, as per Section 14(1) of the IBC, 2016. The moratorium prevented actions such as instituting suits, transferring assets, or recovering property against the Corporate Debtor during the resolution process. The duration of the moratorium would last until the completion of the corporate insolvency resolution process, subject to certain conditions specified in the IBC.

This judgment highlights the legal proceedings initiated by an Operational Creditor against a Corporate Debtor for non-payment of dues, leading to the initiation of the Corporate Insolvency Resolution Process and the imposition of a moratorium to facilitate the resolution of outstanding debts and liabilities.