2017 (10) TMI 294 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process against the Corporate Debtor - proof of default - Held that - From a perusal of the record and the arguments advanced by the Learned Counsel for the parties, we are satisfied that the Operational Creditor has proved by overwhelming evidence that default has occurred, which meets the requirement of Section 9 of the Code. Corporate Debtor has stated at the Bar that he does not have any opposition to the amount as claimed by the Operational Creditor. We further find that the application is complete in all respects as the Insolvency Professional, Advocate Ashok Kumar Juneja has also been proposed who has filed his consent and copy of registration issued by IBBI on 02nd June, 2017. As a sequel to the above discussion, this petition is admitted and Advocate Ashok Kumar Juneja, whose name also figures in the latest list of Insolvency Professionals issued by the Insolvency & Bankruptcy Board of India, is appointed as an Interim Resolution Professional. In pursuance of Section 13 (2) of Code, we direct that public announcement shall be immediately made by the Interim Resolution Professional with regard to admission of this application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code. A necessary consequence of the moratorium flows from the provisions of Section 14 (1)(a), (b), (c) & (d)

Summary

Issues Involved:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Outstanding operational debt and default by the Corporate Debtor.
3. Appointment of Interim Resolution Professional (IRP).
4. Declaration of moratorium under Section 14 of the Code.
5. Compliance and cooperation required from the Corporate Debtor and its personnel.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016:

The "Operational Creditor," M/s lenergizer IT Services Pvt. Ltd., filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process against the "Corporate Debtor," M/s Free Culture Apparels Pvt. Ltd. The application included all necessary details such as the registered office addresses and identification numbers of both parties. The Operational Creditor also submitted a written submission in Form-2 under Rule 9 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, and proposed a change of Insolvency Professional due to the expiration of the previous list.

2. Outstanding operational debt and default by the Corporate Debtor:

The particulars of the operational debt were provided in part 4 of the application, stating a total debt of ?34,16,418/- towards outstanding invoices for services rendered from August 2015 to May 2016, with interest at 24% per annum. The application included detailed invoices and supporting documents such as the "Call Centre Agreement," bank statements, ledger accounts, and Form-26AS, evidencing the deduction of TDS by the Corporate Debtor. The Operational Creditor had previously issued demand notices under Sections 433 and 434 of the Companies Act, 1956, and subsequently under Section 8 of the IBC 2016, but received no response or repayment from the Corporate Debtor.

3. Appointment of Interim Resolution Professional (IRP):

The application proposed Advocate Ashok Kumar Juneja as the Insolvency Professional, who filed his consent and registration issued by IBBI. The Tribunal found the application complete in all respects and satisfied that the Operational Creditor had proved the default by overwhelming evidence. Consequently, the petition was admitted, and Advocate Ashok Kumar Juneja was appointed as the Interim Resolution Professional.

4. Declaration of moratorium under Section 14 of the Code:

In pursuance of Section 13(2) of the Code, the Tribunal directed the Interim Resolution Professional to make a public announcement regarding the admission of the application under Section 7 of the Code. A moratorium was declared in terms of Section 14, imposing prohibitions on:
- The institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, alienating, or disposing of any assets or legal rights.
- Actions to foreclose, recover, or enforce any security interest.
- Recovery of any property by an owner or lessor.

The moratorium does not apply to transactions notified by the Central Government or the supply of essential goods or services to the Corporate Debtor.

5. Compliance and cooperation required from the Corporate Debtor and its personnel:

The Interim Resolution Professional was directed to perform functions as contemplated by Sections 15, 17, 18, 19, 20, and 21 of the Code. All personnel connected with the Corporate Debtor, including promoters and management, are legally obligated under Section 19 to assist and cooperate with the Interim Resolution Professional. Any violation would allow the Interim Resolution Professional to seek appropriate orders from the Tribunal.

Conclusion:

The petition was disposed of with the admission of the application, appointment of the Interim Resolution Professional, declaration of moratorium, and directives for compliance and cooperation from the Corporate Debtor and its personnel.