2018 (11) TMI 1192 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - existence of Operational debt - Held that - From the definition of Operational creditor and Operational Debt , it can be seen that the applicant has provided the services i.e. clearing the shipment of the respondent company from customs. Having providing services to the respondent company, the applicant clearly comes within the definition of Operational Creditor. Similarly, the claim of outstanding payments to applicant comes within the definition of Operational Debt. Respondent company having admitted that they have availed the services provided by the Operational Creditor and there being default in payment of claimed amount, and the respondent failed to establish the fact that there is pending dispute between the parties. Such application deserves to be admitted for triggering Corporate Insolvency Resolution Process against the respondent corporate debtor. It is also pertinent to note here that as per the reply of demand notice dated 22.05.2018 it can be seen that the Corporate Debtor himself have submitted that Easytech i.e the Corporate Debtor has never refused to clear the outstanding dues as claimed in the demand notice. They have further submitted that they are incapable to clear the outstanding payments because of paucity of funds facing by their business organization . Thus, they have admitted the liability. We are satisfied that the present application is complete and there has been part admission of dues and non-payment of the same has resulted in default by respondent. Therefore, on fulfillment of the requirements of section 9 (5) (i) (a) to (d) of the Code, the present application is admitted.

Summary

Issues:
- Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
- Claim of outstanding payments by the operational creditor against the corporate debtor.
- Dispute regarding the quality of services provided by the operational creditor.
- Admission of liability by the corporate debtor.
- Admissibility of the application and imposition of moratorium.
- Appointment of Interim Resolution Professional.

Analysis:
- The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process against the respondent company, claimed to be the corporate debtor. The applicant, an operational creditor, provided services to the respondent company and claimed outstanding payments for the same. The respondent company admitted to availing the services but disputed the quality of services provided.

- The operational creditor maintained a detailed record of transactions and claimed that the respondent failed to clear the outstanding dues, leading to default. The respondent's contention of defective services provided was not substantiated with documentary proof. The Tribunal analyzed the definitions of "Operational Creditor" and "Operational Debt" under the Code, concluding that the applicant fell within these definitions, justifying the claim for outstanding payments.

- The respondent admitted its inability to clear the outstanding dues due to financial constraints, acknowledging the liability. The Tribunal found the application complete, with part admission of dues and non-payment leading to default, satisfying the requirements of the Code for admission of the application.

- The Tribunal admitted the application and directed the appointment of an Interim Resolution Professional, imposing a moratorium as per Section 14 of the Code. The moratorium included prohibitions on legal actions against the corporate debtor and asset transfers. Exceptions to the moratorium were highlighted, ensuring essential services to the corporate debtor were not disrupted.

- An Interim Resolution Professional was appointed to oversee the resolution process, emphasizing adherence to the Code, Rules, and Regulations. The professional was tasked with managing the affairs of the corporate debtor and ensuring cooperation from all involved parties. The Tribunal directed communication of the order to relevant parties promptly.

- Overall, the Tribunal's judgment focused on the admissibility of the application, admission of liability by the respondent, appointment of an Interim Resolution Professional, and imposition of a moratorium to facilitate the Corporate Insolvency Resolution Process effectively.