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2017 (12) TMI 971 - Tri - Insolvency and BankruptcyCorporate insolvency process - liability recoverable from the Corporate Debtor - Held that - Corporate Debtor has been issuing C-Forms and the terms and conditions printed on the invoice clearly provide for a period of 60 days to make the payments, failing which the unpaid amount would attract interest @ 24% per annum. Though the business transaction existed for some time, it is only with effect from 14.05.2016 that the payments became irregular. The emails on record have acknowledged the liability to pay, though the Corporate Debtor has expressed its financial difficulty in liquidating the same. There is no dispute raised in respect of the liability to repay and merely repudiating the same in the reply to the notices would not absolve the Corporate Debtor from initiation of the resolution process against them. E-mails, issuance of C forms, part payment by way of acknowledgement of the outstanding liability on 23.10.2016 as well as their specific confirmation of the outstanding liability of 27.65 lakhs as on 01.04.2017 arc clear admission of a debt due by the Corporate Debtor to the Operational Creditor. In view of the above, as there is a clear liability recoverable from the Corporate Debtor, the Operational Creditor is entitled for initiation of the resolution process.
Issues:
1. Petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor for non-payment of dues. 2. Validity of the petition and compliance with Sections 8 and 9 of the Code. 3. Dispute raised by the Respondent regarding the nature of the transaction and alleged financial losses. 4. Examination of documentary evidence, acknowledgment of liability, and initiation of the resolution process. 5. Admission of the petition, declaration of moratorium under Section 14, and appointment of an Insolvency Resolution Professional (IRP). Issue 1: The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor claiming non-payment of dues by the Corporate Debtor. The Operational Creditor, authorized by a valid Resolution passed by the Board of Directors, sought initiation of the resolution process against the Corporate Debtor for an operational debt amounting to ?33.78 lakhs, inclusive of overdue interest. The Operational Creditor had complied with the necessary requirements of sending a notice under Section 8 of the Code. Issue 2: The Respondent raised objections to the maintainability of the petition, arguing that the transaction was between a principal and its dealer, and the payment was contingent on the sale of goods. Additionally, the Respondent alleged that the Petitioner's direct sales within their territory caused financial losses, leading to a police complaint. However, the Tribunal found the dispute raised to be illusory, as there was no documentary evidence of a dealership agreement, and the terms on the invoices clearly outlined the payment terms. Issue 3: Upon review of the facts, the Tribunal concluded that the Respondent's denial of the outstanding liability did not absolve them from the resolution process, especially considering acknowledgments of the debt in emails and part payments made. The Tribunal found a clear liability on the part of the Corporate Debtor, leading to the admission of the petition and the immediate imposition of a moratorium under Section 14 of the Code. Issue 4: The declaration of the moratorium prohibited various actions against the Corporate Debtor, and the Tribunal referred the case to the Insolvency and Bankruptcy Board of India (IBBI) to recommend the appointment of an Insolvency Resolution Professional (IRP) within 10 days. Once confirmed, the IRP was directed to undertake necessary steps as per the provisions of the Code. This detailed analysis covers the key issues addressed in the judgment, including the validity of the petition, examination of disputes raised, acknowledgment of liability, and the subsequent steps following the admission of the petition under the Insolvency and Bankruptcy Code.
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