2018 (12) TMI 740 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - default in payment of dues - proof of pre-existing dispute - Held that - In this case, the corporate debtor has not raised any objections or disputed the quality of the goods supplied by the operational creditor anytime before the demand notice was issued by the operational creditor or even the reply was not sent within 10 days period in terms of section 8 of the IBC, 2016. In view, of the above this Tribunal is of the view that the there exists no pre-existing dispute between the corporate debtor and the operational creditor. Therefore the instant Petition is admitted and we order the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within 180 days, reckoning from the day this order is passed.

Issues Involved:
1. Existence of a pre-existing dispute.
2. Admission of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.
3. Appointment of the Interim Resolution Professional (IRP).
4. Declaration of moratorium under Section 14 of the IBC, 2016.
5. Directions to the IRP and other parties involved.

Issue-wise Detailed Analysis:

1. Existence of a Pre-Existing Dispute:
The Corporate Debtor contended that there were quality issues with the goods supplied, which led to a dispute. However, the Tribunal noted that the Corporate Debtor did not raise any objections or disputes regarding the quality of the goods before the issuance of the demand notice by the Operational Creditor. The Tribunal referred to Section 8(2) of the IBC, which requires the corporate debtor to bring to the notice of the operational creditor the existence of a dispute within ten days of receipt of the demand notice. Since no such objections were raised within the stipulated period, the Tribunal concluded that there was no pre-existing dispute.

2. Admission of the Petition:
The Tribunal observed that the Respondent/Corporate Debtor had not relied upon any documents to substantiate their claims and had merely denied the averments and allegations made by the Applicant. Given the absence of any pre-existing dispute and the failure of the Corporate Debtor to raise objections within the required timeframe, the Tribunal admitted the petition filed under Section 9 of the IBC, 2016. Consequently, the Tribunal ordered the commencement of the Corporate Insolvency Resolution Process (CIRP), which is to be completed within 180 days from the date of the order.

3. Appointment of the Interim Resolution Professional (IRP):
Since the petitioner did not recommend any name for the IRP, the Tribunal appointed Mr. Subbarayan Nachimuthu as the IRP from the list provided by the Insolvency and Bankruptcy Board of India (IBBI). The IRP was directed to submit his consent in Form-2 within three days of the issuance of the order. The Tribunal confirmed that there were no disciplinary proceedings pending against the IRP and that his name was reflected on the IBBI website.

4. Declaration of Moratorium:
The Tribunal declared a moratorium, effective from the date of the order until the completion of the CIRP, as per Section 14 of the IBC, 2016. The moratorium prohibits:
- The institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, alienating, or disposing of any assets or legal rights of the Corporate Debtor.
- Any action to foreclose, recover, or enforce any security interest created by the Corporate Debtor.
- The recovery of any property by the owner or lessor where such property is occupied by or in possession of the Corporate Debtor.

The supply of essential goods or services to the Corporate Debtor shall not be terminated, suspended, or interrupted during the moratorium period.

5. Directions to the IRP and Other Parties:
The IRP was directed to comply with Sections 13(2), 15, 17, and 18 of the IBC, 2016. The Directors, Promoters, or any other person associated with the management of the Corporate Debtor were instructed to extend all assistance and cooperation to the IRP as stipulated under Section 19 and for discharging his functions under Section 20 of the IBC, 2016. The Financial Creditor/Applicant and the Registry were directed to send a copy of the order to the IRP to enable him to take charge of the Corporate Debtor's assets and ensure compliance with the order. The IRP was also directed to maintain accounts regarding the proceeds from the realization of the assets of the Corporate Debtor to ensure that no sale is effected beyond the claim made by the Petitioner and other claims that may be filed against the Corporate Debtor.

With these directions, the applications were disposed of by the Tribunal.

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