2017 (8) TMI 575 - Tri - Insolvency and Bankruptcy

Initiation of corporate insolvency resolution process - Held that - The amount is due from the Respondent to the Applicant. Respondent is a Company registered under the Companies Act. Therefore, Respondent is a Corporate Debtor within the meaning of sub-section (8) of Section 3 of the Code. The Application filed by the Applicant is complete. Inspite of service of notice, Respondent did not choose to appear before this Authority. No notice of dispute has been given by the Respondent to the Applicant even after receipt of demand notice from the Applicant. Applicant did not name the Interim Insolvency Resolution Professional in the Application. Applicant made a request to refer the matter to the Insolvency Board under Section 16 of the Code. Therefore, there is no need to file the Written Communication of the Interim Resolution Professional. It it is a fit case to initiate insolvency resolution process by admitting the Application under Section 9(5)(1) of the Code. In the case on hand, simultaneous with the admission order, this Adjudicating Authority is not going to appoint Interim Resolution Professional because the Applicant did not propose the name of Interim Resolution Professional. But, this Adjudicating Authority is going to appoint Interim Resolution Professional after the same is recommended by the Insolvency and Bankruptcy Board of India under Section 16(4) of the Code. The Registry is directed to address a letter to the Insolvency and Bankruptcy Board of India, New Delhi to recommend the name of Interim Insolvency Resolution Professional to this Authority, against whom no disciplinary proceedings are pending, within 10 days of receipt of the letter.

Issues:
1. Application for initiation of corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Claim of operational debt by the Applicant against the Respondent for the supply of goods.
3. Legal notices issued by the Applicant to the Respondent for payment.
4. Compliance with Section 8 of the Code regarding demand notice.
5. Adjudication of the Application by the National Company Law Tribunal, Ahmedabad.
6. Appointment of Interim Insolvency Resolution Professional.
7. Declaration of moratorium under Section 13 of the Code.

Analysis:
1. The Applicant filed an Application seeking the initiation of the corporate insolvency resolution process against the Respondent under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Applicant claimed operational debt amounting to ?4,38,071 for the supply of goods to the Respondent, supported by purchase orders, invoices, and legal notices.

2. The Applicant provided evidence of supplying goods to the Respondent as per purchase orders and invoices. The Respondent acknowledged the liability to pay the amount due but failed to make the payment despite repeated demands and legal notices. The Tribunal found the Applicant to be an Operational Creditor as per the Code.

3. Legal notices were issued by the Applicant to the Respondent on multiple occasions demanding payment of the outstanding amount. The Respondent acknowledged the liability but did not settle the dues, leading to the Application for insolvency resolution.

4. The Applicant complied with Section 8 of the Code by issuing a demand notice to the Respondent, which was duly received. The Respondent did not raise any dispute or make any payment, as affirmed by the Applicant in an Affidavit submitted to the Tribunal.

5. The National Company Law Tribunal, Ahmedabad, after considering the arguments and evidence presented, found merit in the Applicant's claim and deemed it appropriate to initiate the insolvency resolution process against the Respondent.

6. The Tribunal noted that the Applicant did not name an Interim Insolvency Resolution Professional in the Application but requested the matter to be referred to the Insolvency Board as per Section 16 of the Code. The Tribunal directed the Registry to seek a recommendation for the appointment of an Interim Resolution Professional.

7. In compliance with Section 13 of the Code, the Tribunal declared a moratorium, prohibiting certain actions against the corporate debtor, and ordered a public announcement of the initiation of the corporate insolvency resolution process. The Tribunal instructed the Insolvency and Bankruptcy Board of India to recommend the name of an Insolvency Professional as the Interim Resolution Professional.

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