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2019 (5) TMI 520 - Tri - Insolvency and BankruptcyInitiation of Corporate Insolvency Resolution Process - Corporate Debtor - declaration of moratorium - appointment of Interim Resolution Professional - HELD THAT - The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This Bench is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt as claimed by the Operational Creditor. Therefore, the Application is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. The moratorium is declared which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process, for the purposes referred to in Section 14 of the I B Code, 2016.
Issues Involved:
1. Whether the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, filed by the Operational Creditor, is maintainable. 2. Whether the Corporate Debtor defaulted in making payment of the outstanding debt. 3. Whether the notice under Section 8 of the I&B Code, 2016, was properly served on the Corporate Debtor. 4. Whether the Corporate Debtor's objections regarding the validity of the debt and procedural compliance are tenable. 5. Whether the moratorium and appointment of an Interim Resolution Professional (IRP) should be ordered. Issue-wise Detailed Analysis: 1. Maintainability of the Application: The application CP/763/IB/2018 was filed by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016 (I&B Code, 2016), seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declaration of moratorium, and appointment of an Interim Resolution Professional (IRP). The tribunal found that the application met the requirements under Section 9 of the I&B Code, 2016, and the Operational Creditor had complied with all procedural requirements, including filing the necessary affidavits and bank certificates. 2. Default in Payment of Outstanding Debt: The Operational Creditor claimed an outstanding amount of ?27,79,59,587.21 against the Corporate Debtor for the supply of mobile handsets and accessories. The tribunal noted that the Operational Creditor had provided sufficient evidence, including invoices, courier delivery confirmations, and a bounced cheque for ?27,79,59,587/- due to insufficient funds. The Corporate Debtor's argument that the goods were delivered to its sister concern and not directly to it was rejected, as the tribunal found the arrangement between the parties to be legitimate and consistent with business practices. 3. Service of Notice under Section 8 of I&B Code, 2016: The Operational Creditor issued a notice under Section 8 in Form-3 to the Corporate Debtor demanding the outstanding amount. The tribunal found that the notice was properly delivered to the Corporate Debtor's registered address as reflected in the Master Data of the MCA and confirmed by courier service delivery reports. The Corporate Debtor's argument that the notice might have been received by another entity in the same building was deemed unsubstantiated and rejected. 4. Validity of Debt and Procedural Compliance: The Corporate Debtor raised several objections, including claims of procedural irregularities and disputes over the validity of the debt. The tribunal found these objections to be unfounded. The tribunal noted that the Corporate Debtor had acknowledged the debt in various communications and documents, including a certificate from its auditor confirming the outstanding balance. The tribunal rejected the Corporate Debtor's arguments about the misuse of a security cheque and the unauthorized issuance of a certificate by the auditor, finding no substantive evidence to support these claims. 5. Moratorium and Appointment of IRP: The tribunal declared a moratorium under Section 14 of the I&B Code, 2016, prohibiting the institution of suits or continuation of pending suits against the Corporate Debtor, transferring or disposing of assets, and recovery actions against the Corporate Debtor's property. The tribunal appointed Mr. B. Ramana Kumar as the Interim Resolution Professional (IRP) and directed him to take charge of the Corporate Debtor's management, make a public announcement, and call for submissions of claims by creditors. Conclusion: The tribunal concluded that the Corporate Debtor had committed a default in making payment of the outstanding debt as claimed by the Operational Creditor. The application was admitted, and the commencement of the Corporate Insolvency Resolution Process was ordered. The tribunal emphasized that the Operational Creditor had fulfilled all legal requirements for the admission of the application, and the Corporate Debtor's objections were found to be without merit.
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