2018 (9) TMI 1227 - Tri - Insolvency and Bankruptcy

Insolvency resolution process against the corporate debtor - Held that - Last payment received from the corporate debtor was to the tune of ₹4 lacs. There are then the balance confirmation letters admittedly executed by the corporate debtor before the expiry of 3 years taken from 21. 03. 2014. The Ledger Account statement was initially filed upto 01. 09. 2014 along with the main petition but copy of the ledger account for the subsequent period has been filed as Annexure A-15 with CA No. 316/2018 which also indicates that no further payment was received from the corporate debtor. Learned counsel appearing for the respondent does not dispute the authenticity of the aforesaid ledger account in view of the balance confirmation letters which have been relied upon by the petitioner. So, simply raising the issue of sub-standard goods in the reply cannot be taken as an existence of a dispute . As perused the written communication in Form 2 furnished by the registered Resolution Professional, proposed to be appointed as the Interim Resolution Professional and the same is found to be in order. All the ingredients required to be established are made out. In view of the above, the instant petition deserves to be admitted. The petition under Section 9 of the Code is, therefore, admitted and the moratorium is declared for prohibiting all of the following in terms of Section 14(1) of the Code

Issues:
1. Initiation of insolvency resolution process against the corporate debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with the requirements of Section 9(3) of the Code.
3. Dispute regarding the quality of goods supplied by the petitioner.
4. Appointment of Interim Resolution Professional.
5. Admissibility of the petition and declaration of moratorium.

Issue 1: Initiation of insolvency resolution process against the corporate debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The petitioner, an operational creditor, filed a petition under Section 9 of the Code to initiate insolvency resolution against the respondent-corporate debtor. The petitioner complied with the necessary formalities, including filing the petition in the prescribed form and providing all required particulars. The respondent-corporate debtor did not file any reply/objections to the application, leading to the application being allowed and documents taken on record. The petition was admitted, and a moratorium was declared to prohibit certain actions against the corporate debtor.

Issue 2: Compliance with the requirements of Section 9(3) of the Code:
The petitioner fulfilled the requirements of Section 9(3) by sending a demand notice, invoice, affidavit confirming no dispute, and a certificate from the financial institution confirming non-payment by the corporate debtor. The petitioner also provided a ledger account and other necessary information. The petitioner's compliance with these requirements was crucial in establishing the validity of the operational debt claim.

Issue 3: Dispute regarding the quality of goods supplied by the petitioner:
The respondent claimed that the goods supplied were sub-standard, citing manufacturing defects and business difficulties. However, the respondent did not raise any dispute regarding the debt in response to the demand notice. The petitioner presented evidence, including ledger accounts and balance confirmation letters, to support the claim of outstanding payments. The Tribunal found that the mere mention of sub-standard goods in the reply did not constitute a valid dispute, especially in the absence of any formal notice challenging the debt.

Issue 4: Appointment of Interim Resolution Professional:
The petitioner proposed the name of an Interim Resolution Professional in the petition, providing necessary details and certifications. The communication from the proposed Resolution Professional was found to be in order, with no pending disciplinary proceedings. The Tribunal accepted the appointment of the proposed professional, ensuring compliance with the procedural requirements for the insolvency resolution process.

Issue 5: Admissibility of the petition and declaration of moratorium:
After careful consideration of the arguments and evidence presented by both parties, the Tribunal found the petition to be admissible. The moratorium was declared under Section 14(1) of the Code, prohibiting specific actions against the corporate debtor. The order specified the duration and conditions of the moratorium, ensuring the continuation of essential goods or services to the debtor while safeguarding the interests of all stakeholders involved in the insolvency resolution process.

This detailed analysis of the judgment from the National Company Law Tribunal, Chandigarh, highlights the procedural compliance, dispute resolution, and the judicial decisions leading to the admission of the petition and the declaration of a moratorium in the context of insolvency resolution proceedings under the Insolvency and Bankruptcy Code, 2016.

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