2018 (5) TMI 1279 - Tri - Insolvency and Bankruptcy

Corporate Insolvency resolution process - Proof of Operational debt - Held that - In the case on hand the amount due from the respondent to the petitioner is an operational debt. Therefore, petitioner is an operational creditor. The amount is due from the respondent Company and therefore respondent is the corporate debtor. The material on record establish that operational debt is due from the corporate debtor to the operational creditor and in respect of the same a default has been committed. Corporate debtor did not raise a plea that there exist a dispute in respect of the operational debt claimed or exist a suit or pendency of other proceeding in respect of the operational debt. The petition is complete in all respects. This application deserves to be admitted and it is accordingly admitted.

Summary

Issues:
- Corporate insolvency resolution process under Sec. 9 of the Insolvency and Bankruptcy Code 2016
- Default in repayment of operational debt by the corporate debtor
- Appointment of Interim Resolution Professional
- Declaration of moratorium under Section 13 of the Code

Analysis:

1. The petition was filed by an operational creditor seeking corporate insolvency resolution process against the corporate debtor under Sec. 9 of the Insolvency and Bankruptcy Code 2016. The operational creditor provided services to the corporate debtor as per an Agency Agreement, raising invoices totaling &8377; 75,80,161, which remained unpaid from May 2016 to May 2017. The operational creditor issued a demand notice, but it was returned unserved due to insufficient address. The operational creditor established the operational debt and filed all necessary documents, including proof of service and outstanding amounts. The corporate debtor failed to appear or reply to the notices served.

2. The Tribunal examined the agency agreement, invoices, and email correspondence, concluding that the operational creditor was due payment in May as per the agreement. The operational creditor's bank statement and certificate confirmed non-payment by the corporate debtor, establishing the operational debt. The Tribunal found the operational debt fell under the definition of operational debt as per Section 5(21) of the Code, making the petitioner an operational creditor and the respondent a corporate debtor. No dispute or pending proceedings were raised by the corporate debtor.

3. The Adjudicating Authority admitted the application, appointing an Insolvency Professional as the Interim Resolution Professional under Sec. 13(1)(b) of the Code. Following the admission, the Authority declared a moratorium under Section 13(1)(a), prohibiting certain actions against the corporate debtor, including instituting suits, transferring assets, or enforcing security interests. Exceptions were made for essential goods or services supply to the corporate debtor. The moratorium was to be in force until the completion of the Corporate Insolvency Resolution Process, subject to the provisions under Section 14(4) of the Code.

4. The Tribunal ordered the moratorium and directed the Applicant to make a public announcement about the initiation of the Corporate Insolvency Resolution Process. The order was to be in effect from the date of issuance until the completion of the resolution process, in accordance with the Code's provisions. The petition was granted accordingly, marking the commencement of the corporate insolvency resolution process against the corporate debtor.