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2017 (10) TMI 516 - Tri - Insolvency and BankruptcyCorporate Insolvency Resolution Process - Corporate Debtor under Insolvency & Bankruptcy Code, 2016 - Held that - Operational Creditor that a statutory notice dated 12.8.2015 was issued under the erstwhile provisions of the Companies Act, 1956 for winding up the company on the grounds of inability to pay its debt and even though the said notice was received, no reply was forthcoming on the part of the Corporate Debtor. Despite subsequent reminders, the Corporate Debtor was not paying the balance sum due and hence, the Operational Creditor, it is stated caused a notice dated 9.2.2017 to be issued under the relevant provisions of IBC, 2016. Subsequent to the receipt of notice, the Corporate Debtor through its Advocate, it is stated to have caused a reply to be sent to the notice sent by the Operational Creditor dated 28.2.2017. However, it is contended by the Operational Creditor that in the reply, no dispute had been raised against the claim of the Operational Creditor nor any intimation regarding payment made in relation to the debt/default due has been specified and in the circumstances, the present application seeking for initiation of the Corporate Insolvency Resolution Process (CIRP) has been filed against the Corporate Debtor.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under the Insolvency & Bankruptcy Code, 2016 (IBC, 2016). 2. Maintainability and merits of applications filed by Operational Creditors. 3. Preference of applications filed by Operational Creditors over the Corporate Debtor’s application. 4. Compliance with Section 9(3)(c) of IBC, 2016 regarding the certificate from financial institutions. 5. Appointment of Interim Resolution Professional (IRP). Detailed Analysis: 1. Initiation of CIRP under IBC, 2016: The judgment addresses four petitions related to the initiation of CIRP against the Corporate Debtor. Three petitions were filed by Operational Creditors under Section 9 of IBC, 2016, and one by the Corporate Debtor itself under Section 10 of IBC, 2016. 2. Maintainability and Merits of Applications by Operational Creditors: The Tribunal first examined the applications filed by the Operational Creditors to determine their sustainability under IBC, 2016. The applications were scrutinized for compliance with statutory requirements, including the provision of a certificate from financial institutions as mandated by Section 9(3)(c) of IBC, 2016. CA No. (IB)-160(PB)/2017: - The Operational Creditor claimed a default amount of ?54,60,771/- and additional interest, totaling ?69,07,800/-. - The Tribunal noted that the Operational Creditor had issued a demand notice, and the Corporate Debtor failed to respond within the mandatory period. - The Tribunal found the application maintainable and admitted it for initiating CIRP. CA No. (IB)-180(ND)/2017: - The Operational Creditor claimed a default amount of ?26,56,747/-. - Despite issuing a statutory notice, the Corporate Debtor did not pay the outstanding amount. - The Tribunal rejected the application due to non-compliance with Section 9(3)(c) of IBC, 2016, as the required certificate from the financial institution was not provided. CA No. (IB)-181(ND)/2017: - The Operational Creditor claimed a default amount of ?5,39,821/- plus interest. - The Tribunal rejected the application due to non-compliance with Section 9(3)(c) of IBC, 2016, as the certificate from the financial institution was not in accordance with the statutory requirements. 3. Preference of Applications Filed by Operational Creditors: The Tribunal chose to prioritize the applications filed by the Operational Creditors over the Corporate Debtor’s application to avoid any semblance of unfairness and ensure transparency. This approach aligns with the Tribunal’s role as a Court of Equity and the objectives of IBC, 2016. 4. Compliance with Section 9(3)(c) of IBC, 2016: The Tribunal emphasized the importance of the certificate from financial institutions confirming the non-payment of operational debt, as mandated by Section 9(3)(c) of IBC, 2016. The lack of such a certificate led to the rejection of applications in CA No. (IB)-180(ND)/2017 and CA No. (IB)-181(ND)/2017. 5. Appointment of Interim Resolution Professional (IRP): The Tribunal discussed the appointment of an IRP, highlighting the preference for appointing an IRP named by the creditors rather than the Corporate Debtor. This approach ensures that the IRP serves the interests of all stakeholders and aligns with the objectives of IBC, 2016. The Tribunal decided to refer the matter to the Insolvency and Bankruptcy Board of India (IBBI) for recommending an IRP. Conclusion: The Tribunal admitted the application in CA No. (IB)-160(PB)/2017 for initiating CIRP against the Corporate Debtor and dismissed the applications in CA No. (IB)-180(ND)/2017 and CA No. (IB)-181(ND)/2017 due to non-compliance with Section 9(3)(c) of IBC, 2016. The Tribunal also directed the IBBI to recommend an IRP and highlighted the need for financial institutions to comply with statutory mandates.
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