2018 (10) TMI 980 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - Held that - This Petition clearly reveals that there is a debt as defined in Section 3(11) of IBC read with Regulation 7 of CIRP Regulation, also there is default in this case within the meaning of Section 3(12) of IBC and the corporate debtor having named the Interim Resolution Professional with his consent, there being no disciplinary proceedings against the IRP, this Bench hereby admits this petition filed under Section 9 of IBC, declaring moratorium.

Summary

Issues involved:
Company petition under Section 9 of IBC against a Corporate Debtor for default in payment of a decree amount.

Analysis:
The petition was filed by an Operational Creditor against the Corporate Debtor under Section 9 of the Insolvency & Bankruptcy Code, 2016, based on a decree obtained for non-payment of a substantial amount. The Creditor provided mobile phone connections to the Debtor in 2003, leading to a dispute over unpaid dues. Legal proceedings were initiated, including a Company Petition in 2005 and a Summary Suit in 2006, resulting in a decree against the Debtor for the outstanding amount. Despite attempts by the Debtor to challenge the decree, including filing a Notice of Motion and subsequent appeals, the courts upheld the decree, noting the lack of defense and special circumstances justifying setting aside the order. The Supreme Court also dismissed the appeal, emphasizing the Debtor's failure to contest the liability or provide evidence against the interest rate charged. The amount deposited by the Debtor was eventually withdrawn by the Creditor, leading to the initiation of IBC proceedings.

In the IBC proceedings, the Creditor provided evidence of service of the Company Petition on the Debtor, who failed to appear before the Tribunal. The Tribunal found that the debt and default criteria under the IBC were met, leading to the admission of the petition under Section 9 of the IBC. Consequently, a moratorium was declared, prohibiting legal actions against the Corporate Debtor, appointing an Interim Resolution Professional, and ensuring continuity of essential services during the resolution process. The moratorium was set to last until the completion of the resolution process or liquidation, with specific directions regarding asset disposal and public announcement requirements. The order was communicated to all relevant parties for compliance.