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2018 (12) TMI 1946 - Tri - Insolvency and BankruptcyMaintainability 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 - The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This IRP is also directed to cause public announcement as prescribed under Section 15 of the I B Code 2016 within three days from the date the copy of this Order is received and call for submissions of claim by the creditors in the manner as prescribed. The scheme is approved - application allowed.
Issues:
Application under Section 9 of the Insolvency & Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process. Analysis: The Operational Creditor filed an application seeking admission to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor under Section 9 of the Insolvency & Bankruptcy Code, 2016. The debt claimed by the Operational Creditor amounted to ?83,13,973, inclusive of interest. The dispute arose from a contract between the Operational Creditor and the Corporate Debtor for the supply of light fittings for a construction project with Chennai Metro Rail Limited. The Corporate Debtor received a special advance of ?50 Lakhs from CMRL on behalf of the Operational Creditor, but the contract was later canceled, leading to a demand for repayment. Despite confirmation from CMRL regarding the payment, the Corporate Debtor refused to make the payment, resulting in the Operational Creditor seeking relief through the insolvency process. The Corporate Debtor argued that the Proprietorship Firm still existed and had not been taken over by the Corporate entity. However, the Operational Creditor provided evidence, including correspondence and minutes of meetings, to show that the cancellation of the contract was communicated to the Proprietorship Firm. The Corporate Debtor's objections regarding the Memorandum of Association were rejected by the Authority, emphasizing the conversion of the Firm into a Corporate entity. The Corporate Debtor further contended that the Proprietorship Firm continued to pay taxes and operate, contrary to the Memorandum of Association. The Authority noted that despite these actions, the Firm had been officially converted into a Corporate entity as per the Memorandum of Association, establishing the legitimacy of the conversion. The Operational Creditor fulfilled all legal requirements for admission of the application, leading to the appointment of an Interim Resolution Professional (IRP). The IRP was directed to follow the provisions of the Insolvency & Bankruptcy Code, 2016, and the Directors of the Corporate Debtor were instructed to cooperate with the IRP. The Registry was tasked with communicating the Order to all relevant parties, ensuring compliance with the insolvency process.
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