2017 (9) TMI 493 - Tri - Insolvency and Bankruptcy

Proceedings under Insolvency and Bankruptcy Code - Held that - Since the Corporate Debtor has admitted issuing Purchase Orders and work order, thereafter the petitioner raising invoices and acknowledging Delivery Challans with signature of the Corporate Debtor side, in case if the Corporate Debtor is to prove some of the goods returned, the burden is cast upon this Corporate Debtor to prove that some of the goods have been returned, since this Corporate Debtor has not made any such efforts to prove to the satisfaction of this Bench that some of the goods have been returned, we have not found any merit in the defense first time set up by the Corporate Debtor, hence, we admit this petition . Public announcement of the corporate insolvency resolution process shall be made immediately as specified under section 13 of the Code. This Bench makes a reference to the Insolvency and Bankruptcy Board of India (IBBI) for the recommendation of Insolvency Professional for appointment as Interim Resolution Professional.

Issues:
1. Initiation of Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code.
2. Dispute regarding non-payment by the Corporate Debtor to the Operational Creditor for goods and labor services supplied.
3. Defense raised by the Corporate Debtor regarding partial payment, return of goods, and arbitration clause in the Purchase Order.
4. Admission of facts by the Corporate Debtor through email communication.
5. Decision on the admission of the Company Petition and imposition of moratorium.

Analysis:
1. The Company Petition was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code against the Corporate Debtor for non-payment of dues amounting to ?55,28,864. The Operational Creditor alleged that despite a partial payment of ?6,75,000, the Corporate Debtor failed to clear the remaining outstanding amount, leading to the initiation of the insolvency resolution process.

2. The Operational Creditor provided detailed facts of the case, including the issuance of Purchase Orders, delivery of goods, and labor services for installation. The Corporate Debtor, in response, raised a defense claiming that it had only accepted invoices amounting to ?27,14,858, not the entire sum claimed. Additionally, the Corporate Debtor alleged that some goods were returned, supported by a delivery challan without the necessary seal and signatures, which the Petitioner argued was a tactic to delay payment.

3. The Corporate Debtor further contended that an arbitration clause in the Purchase Order should be invoked for resolving the dispute. However, the Corporate Debtor's failure to provide substantial evidence or engage in arbitration proceedings led the Bench to dismiss this defense and admit the Company Petition for further resolution.

4. The Bench scrutinized the evidence presented by the Operational Creditor, including work orders, invoices, delivery challans, and bank statements, to ascertain the default in payment by the Corporate Debtor. The Corporate Debtor's admission of issuing Purchase Orders and partial payment, coupled with the lack of substantial proof of goods return, strengthened the case for admission of the petition.

5. Consequently, the Bench granted reliefs by prohibiting legal actions against the Corporate Debtor, imposing a moratorium, and initiating the corporate insolvency resolution process. The order specified the duration of the moratorium, protection of essential services, and the necessity for a public announcement. Additionally, a recommendation was made to appoint an Insolvency Professional, and the Registry was directed to communicate the order to both parties, ensuring compliance with the resolution process.

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