2018 (6) TMI 844 - Tri - Insolvency and Bankruptcy

Insolvency Resolution Process - outstanding debt - satisfaction of the ingredients as provided under section 9(5) (i) of the Code - Held that - The operational creditor succeeds in proving that the application is complete, that there is no payment of the unpaid operational debt, that the demand notice has been delivered by the operational creditor, that no notice of dispute has been received by the operational creditor and that there is no disciplinary proceeding pending against the resolution professional, this application is liable to be allowed. The applicant in the case in hand succeeds in proving all the ingredients of section 9 (5)(i) of the Code, and further proves failure on the side of the Corporate Debtor in clearing the debt due to the Operational Creditor, even after receiving the demand notice under section 8(1) of the Code. The application filed by the operational creditor under section 9 of the Insolvency & Bankruptcy Code, 2016 deserves to be admitted

Summary

Issues Involved:
1. Non-payment of operational debt by the Corporate Debtor.
2. Dispute over the interest component claimed by the Operational Creditor.
3. Financial inability of the Corporate Debtor to repay the debt.
4. Compliance with Section 9 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Non-payment of Operational Debt by the Corporate Debtor:
The Operational Creditor, Nile Traders, supplied goods to the Corporate Debtor, Rukmani Infra Projects Pvt. Ltd., and raised invoices amounting to ?55,89,930/-. Despite repeated requests and reminders, the Corporate Debtor failed to make any payment. The Operational Creditor issued a statutory demand notice dated January 15, 2018, claiming a total outstanding amount of ?1,11,59,511/- including interest. The Corporate Debtor acknowledged the principal amount due but failed to make any payment.

2. Dispute over the Interest Component Claimed by the Operational Creditor:
The Corporate Debtor contested the interest claim of ?55,69,581/- at 24% per annum, deeming it unreasonable. However, the tax invoices contained a clause regarding the charging of interest at 24% if payment was not made after the due date. The invoices were signed and stamped by the Corporate Debtor, thus accepting the terms and conditions, including the interest component. The Tribunal found no cogent grounds for disputing the interest component.

3. Financial Inability of the Corporate Debtor to Repay the Debt:
The Corporate Debtor argued that its financial condition was poor and it was under heavy financial pressure. It claimed that a significant amount was receivable from various customers and requested more time to make the payment. The Corporate Debtor expressed optimism about future profits from the power sector, which would enable it to clear the dues. However, the Tribunal noted that the Corporate Debtor had incurred losses for the last three consecutive years, indicating mismanagement and declining asset value.

4. Compliance with Section 9 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal examined whether the application met the requirements under Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016. The Operational Creditor provided copies of invoices, the demand notice, an affidavit confirming no notice of dispute, and a bank certificate confirming non-payment. The Tribunal found that the application was complete, the unpaid operational debt was established, the demand notice was delivered, and there was no notice of dispute. The proposed Interim Resolution Professional, Mr. Saradindu Jena, was found to have no disciplinary proceedings pending against him.

Order:
The application filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, was admitted for initiating the Corporate Insolvency Resolution Process (CIRP). A moratorium was declared as per Section 14 of the Insolvency and Bankruptcy Code, 2016, prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. The Interim Resolution Professional was directed to make a public announcement and convene a meeting of the Committee of Creditors for evolving a resolution plan. The matter was listed for a progress report on June 14, 2018. Urgent certified copies of the order were directed to be supplied to the parties upon compliance with requisite formalities.