2018 (9) TMI 1228 - Tri - Insolvency and Bankruptcy

Corporate insolvency proceedings - whether Corporate Debtor is liable to pay operational debt to the Petitioner/Operational Creditor? - Held that - Section 3(23) defines person which includes entity established under a statute. Operational Creditor is shown as M/s. Shruti Impex , a sole proprietary firm. This firm is said to have been established under a statute. The copy of certificate of provisional registration GST certificate is filed. It is shown as Annexure-3 at page No.7. It is dated 28.06.2017. This certificate is issued under the provisions of an Act. The firm falls under Clause (g) of Section 3(23) Claim in respect of provision of goods supplied to the Corporate Debtor. Therefore, it is an operational debt. The Petitioner is an entity established under a Statute and comes within the definition of person. Therefore, Petitioner is an operational creditor. Thus, Operational creditor is entitled to maintain the present petition. The operational Creditor is able to establish that there is a default committed by the Corporate Debtor. Therefore, Petition is to be admitted. Hence, the Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code. Petition admitted.

Issues Involved:
1. Compliance with statutory provisions under IBC, 2016.
2. Inconsistency in the claimed debt amount.
3. Proof of delivery of demand notice.
4. Status of the petitioner as an Operational Creditor.
5. Liability for LOC discounting charges.
6. Payment disputes and alleged discharge of debt.
7. Service of petition copy to the Corporate Debtor.
8. Maintenance of the petition by a proprietary firm.

Issue-wise Detailed Analysis:

1. Compliance with Statutory Provisions:
The Corporate Debtor contended that the petition was filed in Form No.5 and did not comply with statutory provisions, thus it should be dismissed. However, the Tribunal found that the petition was filed correctly under Section 9 of the Insolvency & Bankruptcy Code, 2016, read with Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

2. Inconsistency in the Claimed Debt Amount:
The Corporate Debtor argued that there was a discrepancy between the claimed debt amount in the demand notice and the petition. The demand notice dated 20.12.2017 showed an unpaid operational debt of ?40,63,877/-, which was consistent with the amount stated in Form 5 of the petition. Therefore, the Tribunal found no variance in the claimed debt amount.

3. Proof of Delivery of Demand Notice:
The Corporate Debtor claimed that the Operational Creditor did not provide proof of delivery of the demand notice. However, the Operational Creditor provided postal tracking records showing that the demand notice was delivered to the Corporate Debtor. Thus, the Tribunal concluded that the demand notice was duly served.

4. Status of the Petitioner as an Operational Creditor:
The Corporate Debtor contended that the petitioner was not an Operational Creditor as defined under Section 5(20) of the IBC, 2016. The Tribunal found that the petitioner, being a sole proprietary firm registered under GST, falls within the definition of an entity established under a statute, thus qualifying as an Operational Creditor.

5. Liability for LOC Discounting Charges:
The Corporate Debtor argued that it was not liable for the LOC discounting charges incurred by the Operational Creditor. The Tribunal held that since the LOC was issued by the Corporate Debtor, any discounting charges deducted by the bank should be borne by the Corporate Debtor, not the Operational Creditor.

6. Payment Disputes and Alleged Discharge of Debt:
The Corporate Debtor claimed that it had made payments to Mr. Aziz Sultan and other amounts, which should be considered as discharge of the debt. The Tribunal found that the Corporate Debtor failed to provide sufficient evidence linking these payments to the transactions with the Operational Creditor. The Tribunal noted that the Corporate Debtor did not raise any dispute before the demand notice was issued and failed to prove the alleged discharge of the debt.

7. Service of Petition Copy to the Corporate Debtor:
The Corporate Debtor contended that the petition copy was not sent as required under Rule 6(2) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Tribunal found that the Operational Creditor had complied with the requirement by sending the petition copy along with the notice by registered post, as evidenced by the postal track record.

8. Maintenance of the Petition by a Proprietary Firm:
The Corporate Debtor argued that the petitioner, being a proprietary firm, could not maintain the petition. The Tribunal referred to the definition of "person" under Section 3(23) of the IBC, 2016, which includes entities established under a statute. The Tribunal concluded that the petitioner, being a proprietary firm registered under GST, could maintain the petition as an Operational Creditor.

Conclusion:
The Tribunal admitted the petition under Section 9 of the IBC, 2016, declaring a moratorium for the purposes referred to in Section 14 of the Code. The Tribunal appointed an Interim Resolution Professional and directed the initiation of the Corporate Insolvency Resolution Process. The petition was found to be compliant with the statutory provisions, and the Operational Creditor successfully established the default committed by the Corporate Debtor.

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