2019 (7) TMI 910 - Tri - Insolvency and Bankruptcy

Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - corporate debtor - matter is heard ex-parte - service of notice - HELD THAT - On perusal of the material available on record it is found that, the notice issued through the Registry has been served upon respondent on 11.02.2019 and notice issued by the petitioner to the respondent is served on 23.02.2019. Therefore, the service of notice is complete. Since no representation is received from the side of the corporate debtor/respondent, the matter is heard in absence of the respondent. Section 13 of the Code enjoins upon the Adjudicating Authority to exercise its discretion to pass an order to declare a moratorium for the purposes referred to in Section 14, to cause a public announcement of the initiation of corporate insolvency resolution and call for submission of claims as provided under Section 15 of the Code. Sub-section (2) of Section 13 says that public announcement shall be made immediately after the appointment of Interim Insolvency Resolution Professional. This Adjudicating Authority directs the Insolvency Resolution Professional to make public announcement of initiation of Corporate Insolvency Process and calls for submission of claims under Section 15 as required by Section 13(l)(b) of the Code - it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code. Petition admitted - moratorium declared.

Summary

Issues Involved:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for triggering Insolvency Resolution Process against a corporate debtor.

Detailed Analysis:

1. Operational Debt and Documentation:
The applicant, a sole proprietorship company, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the respondent, a private limited company, for the recovery of a debt related to the supply of castor seeds and jute bags. The applicant provided detailed information regarding the debt due, including invoices and bank statements, amounting to ?5,57,67,690. The respondent issued cheques that were subsequently dishonored, leading to the debt falling due on 02.04.2018.

2. Ex-Parte Hearing and Service of Notice:
Despite the issuance of notices to the respondent, there was no appearance by the respondent or their legal representation before the Adjudicating Authority. The matter proceeded ex-parte due to the respondent's non-appearance. The service of notice was deemed complete, allowing the hearing to proceed in the absence of the respondent.

3. Adjudication and Legal Considerations:
The Adjudicating Authority analyzed the application in line with the requirements under Section 9 of the Act, focusing on the existence of operational debt exceeding ?1.00 lakh, documentary evidence supporting the debt, and the absence of disputes or legal proceedings. The Authority referred to the legislative guide on Insolvency Law and emphasized the need to establish the debt's legitimacy and default occurrence.

4. Appointment of Interim Insolvency Professional and Moratorium Declaration:
The Adjudicating Authority appointed an Interim Insolvency Professional and declared a moratorium under Section 13 of the Code. The moratorium aimed to prohibit legal actions against the corporate debtor, asset transfers, enforcement of security interests, and property recovery. Essential services to the corporate debtor were to continue during the moratorium period, with exceptions as notified by the Central Government.

5. Resolution Process and Order:
Based on the evidence presented and legal considerations, the Adjudicating Authority admitted the application, initiating the Insolvency Resolution Process. The order included directions for public announcements, claims submission, and the effective period of the moratorium until the completion of the resolution process or liquidation order. The petition was disposed of with no costs awarded, and communication of the order was directed to relevant parties.

This comprehensive analysis outlines the key aspects of the judgment, including debt details, procedural steps, legal considerations, and the Authority's decision to admit the application for insolvency resolution against the corporate debtor.