2018 (6) TMI 731 - Tri - Insolvency and Bankruptcy

Initiating of insolvency resolution process - Held that - The application filed by the operational creditor is complete in all respects and the defects pointed out have been removed. Learned counsel for the respondent submits that the corporate debtor is not to raise any objections. The petitioner has also filed with this petition copies of all the invoices of sales. The petitioner has also complied with the requirements of Section 9(3)(b) and 9(3)(c) of the Code. As per sub-section (4) of Section 9 and Section 16 of the code it is optional for the operational creditor to propose the name of Resolution Professional to be appointed as the Interim Resolution Professional. In the instant case the petitioner has filed the written communication Annexure A-3 in Form No. 2 furnished by Mr. Vikas Garg, registered with Insolvency and Bankruptcy Board of India. His registration number is IBBI/IPA002/IP-N00189/2017-18/10506. The Resolution Professional has furnished all the required information giving his consent disclosing that he is not serving as Interim Resolution Professional, Resolution Professional or Liquidator in any case so far. It is also certified that there are no disciplinary proceedings pending against him with the Board or ICSI Insolvency Professional Agency (ICSI IPA). - In view of the above the instant petition deserves to be admitted.

Summary

Issues:
Initiating insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The petition filed by M/s. PAN Chemicals Inc. sought to initiate insolvency resolution against the respondent-corporate debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016. The petitioner, a proprietorship concern with Mr. Ramji Lal as the sole proprietor, claimed to be the operational creditor and filed the application in Form 5 as per the prescribed rules. The respondent-corporate debtor was incorporated under the Companies Act, 1956, with a nominal share capital of &8377; 26,00,00,000/- and paid-up share capital of &8377; 24,48,00,000/-. The petitioner supplied materials to the respondent as per purchase orders but alleged non-payment of bills totaling to &8377; 6,71,816.93. The petitioner sent a Demand Notice to the respondent before filing the petition, attaching invoices and ledger accounts. The respondent allegedly acknowledged the outstanding amount but did not make the payment, leading to the initiation of insolvency proceedings.

The petitioner faced some procedural issues initially, such as incomplete bank account statements and missing ledger account details. However, these defects were rectified by submitting complete bank statements and certificates from the banks confirming non-payment by the corporate debtor. The respondent did not raise any objections, and the petitioner complied with the necessary requirements of the Code. The Resolution Professional proposed by the operational creditor was found suitable with no pending disciplinary proceedings, meeting the criteria for appointment. The application was deemed complete, and all necessary documents were submitted, leading to the admission of the petition.

The Tribunal, after considering the facts and submissions, admitted the petition and declared a moratorium, prohibiting various actions against the corporate debtor. The moratorium was to be in effect until the completion of the insolvency resolution process or until further orders were passed. Essential supplies to the corporate debtor were to continue during the moratorium period, with exceptions as notified by the Central Government in consultation with financial regulators. The matter was scheduled for further proceedings to appoint an Interim Resolution Professional and issue additional directions.

In conclusion, the judgment detailed the process of initiating insolvency resolution under Section 9 of the Insolvency and Bankruptcy Code, highlighting the steps taken by the petitioner, procedural challenges faced, and the eventual admission of the petition with the declaration of a moratorium to facilitate the resolution process.