2018 (2) TMI 731 - Tri - Insolvency and Bankruptcy

Insolvency resolution process - existence of default in payment of debt - delivery of demand notice to the corporate-debtor - Held that - There is no averment in the objections that the address of the corporate-debtor as furnished by the operational creditor was inicorrect. Rather, there is no challenge with regard to the delivery of the entire paper book, which was sent at the time of filing the instant petition and also receipt of notice of the instant petition issued by the Adjudicating Authority at the same address. Anyhow, the tracking report of the postal department with regard to delivery of the demand notice is the conclusive proof of the delivery and this objection seems to have been taken just for the sake of it. The resolution process can be initiated on occurrence of the default by the corporate-debtor as per Section 8(1) of the Code. Admittedly the respondent-corporate debtor has committed default as according to the respondent itself, there is an outstanding liability of ₹ 68,20,235/- as on 11.05.2017 as per its own ledger account as at Annexure R-1 attached with the objections. The application filed in Form No.5 is complete in all respects as the required information has been furnished. The petitioner has also complied with various clauses (a), (b) and (c) of Section 9 (3) of the Code as already discussed. The petitioner cannot be forced to buy goods from the respondent-corporate debtor and it has every right to claim the outstanding amount which is overdue. The petitioner admittedly stopped making purchases from the respondent-corporate debtor from May 2017 and sent the demand notice under Section 8(1) of the Code which would have been a sufficient alert for the respondent, to repay the outstanding amount. The respondent cannot raise a voice to say that there was no term fixed for payment for the outstanding amount on the ground that the transactions between the parties continued in the normal course of business since 2012 and that various payments have been made from time to time as reflected from the ledger account of both the parties. The above contention cannot be said to raising a dispute which may be covered within the definition of the term as defined in sub-section (6) of Section 5 of the Code. If there is a difference of about ₹ 2 lacs in the total outstanding amount as per the books of account of the parties, that is for the Interim Resolution Professional or Resolution Professional as the case may be, to determine. The term default is defined in sub-section (12) of Section 3 of the Code as per which non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be. One of the objections raised by the corporate debtor that there is concealment of material fact by the operational creditor with regard to the purchases made by the petitioner from the respondent is not acceptable as there is a categorical assertion of the petitioner that the goods/materials were supplied as per the invoices/bills (sales) to the corporate debtor and thereafter against the entire outstanding payment of supply of goods/materials there was adjustments/set-off in the books of account of the operational creditor as payments/part payments of entire outstanding amount by way of purchase of items of corporate debtor as per the summary statement. So, there is no force in the contention that there is concealment of the material facts. Instant petition deserves to be admitted. The instant petition is admitted declaring moratorium in terms of sub-section (1) of Section 14 of the Code.

Issues Involved:
1. Jurisdiction of the Tribunal
2. Supply of Goods and Outstanding Payment
3. Demand Notice and Response
4. Alleged Oral Arrangement and Dispute
5. Compliance with Insolvency and Bankruptcy Code, 2016
6. Appointment of Interim Resolution Professional
7. Moratorium and Directions

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal:
The respondent-corporate debtor was incorporated on 30.08.2005 and has its registered office in Lalru, Derabassi Sub-Division, Punjab. Hence, the matter falls within the territorial jurisdiction of the National Company Law Tribunal, Chandigarh Bench.

2. Supply of Goods and Outstanding Payment:
The petitioner-operational creditor supplied goods/materials to the respondent-corporate debtor as per invoices from 06.09.2012 to 11.05.2017. Payments were adjusted/set-off in the books of account, resulting in a balance default amount of ?70,33,514.60 as on 18.11.2017. The petitioner maintained a ledger account reflecting these transactions.

3. Demand Notice and Response:
The petitioner sent a demand notice dated 06.11.2017 under Section 8(1) of the Insolvency and Bankruptcy Code, 2016, which was delivered to the respondent on 07.11.2017. The respondent did not reply to the demand notice, and the petitioner filed the petition on 23.11.2017, complying with the 10-day period required by Section 9(1) of the Code.

4. Alleged Oral Arrangement and Dispute:
The respondent claimed an oral arrangement existed wherein it supplied "Yarn" against the price of chemicals from the petitioner. The petitioner allegedly stopped buying "Yarn," leading to an increase in the debt shown. The respondent contended that the petition was premature due to this arrangement and challenged the amount claimed by the petitioner.

5. Compliance with Insolvency and Bankruptcy Code, 2016:
The Tribunal found that the application filed in Form No.5 was complete and complied with Sections 9(3)(a), (b), and (c) of the Code. The respondent admitted an outstanding liability of ?68,20,235/-, fulfilling the criteria for initiating the insolvency resolution process under Section 8(1) of the Code.

6. Appointment of Interim Resolution Professional:
The petitioner proposed Mr. Sanjay Kumar Aggarwal as the Interim Resolution Professional (IRP), who consented and provided necessary particulars in Form No.2. The Tribunal found no disciplinary proceedings against him and appointed him as the IRP for 30 days or as determined by the committee of creditors.

7. Moratorium and Directions:
The Tribunal declared a moratorium prohibiting:
(a) Institution or continuation of suits or proceedings against the corporate debtor.
(b) Transfer, encumbrance, alienation, or disposal of corporate debtor's assets.
(c) Actions to foreclose, recover, or enforce any security interest.
(d) Recovery of property by an owner or lessor.

The Tribunal directed the supply of essential goods/services to continue during the moratorium. The IRP was instructed to manage the corporate debtor's affairs, constitute the committee of creditors, make a public announcement, appoint two registered valuers, and file weekly reports to the Tribunal.

Conclusion:
The petition was admitted, initiating the corporate insolvency resolution process, and Mr. Sanjay Kumar Aggarwal was appointed as the Interim Resolution Professional. The moratorium was declared, and specific directions were issued to ensure compliance with the Code.

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