2019 (12) TMI 894 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate debtor defaulted in making repayment - existence of debt and dispute or not - HELD THAT - As per the order dated 01.08.2019 of this tribunal it is noted that the Corporate Debtor is not in a position to clear the debt that due presently. Hence this tribunal vide the order dated 01.08.2019 direct the Corporate Debtor to file an affidavit in relation to the admission of claim. From the definition of Operational creditor and Operational Debt'', it can be seen that the applicant has provided services to the respondent and has placed sufficient evidence to prove its claim. There was a default in payment of claimed amount, and the respondent failed to establish the fact that there is a pending dispute between the parties in respect of the amount claimed. Moreover, the respondent has also filed an affidavit in which it has been submitted that Respondent is not in the position to honour the debt owed to the Operational Creditor - In light of the same, such application deserves to be admitted for triggering Corporate Insolvency Resolution Process against the respondent corporate debtor. Besides, the respondent had not issued any notice of dispute after receiving demand notice in terms of Section 8 of the Code. The present petition is complete and there has been default in payment of dues by the respondent. Therefore, on fulfilment of the requirements of section 9 (5) (i) (a) to (d) of the Code, the present petition warrants admission. Petition admitted - moratorium declared.

Issues:
1. Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Default in payment of salary dues by the respondent company.
3. Admission of debt by the respondent company.
4. Appointment of Interim Resolution Professional.
5. Declaration of moratorium under Section 14 of the Code.
6. Duties and obligations of the Interim Resolution Professional.
7. Communication of the order to relevant parties.
8. Resolution of discrepancies in the statement of account.

Analysis:
1. 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, claiming default in payment of salary dues to the applicant, an operational creditor. The applicant provided evidence of services rendered and non-payment of dues by the respondent, who admitted the debt owed. The tribunal found the application complete and admitted it for further proceedings.

2. The respondent company failed to pay the outstanding salary dues to the applicant despite repeated reminders and a demand notice. The respondent's admission of the debt in default further substantiated the applicant's claim for initiation of Corporate Insolvency Resolution Process. The tribunal noted the absence of any pending dispute between the parties regarding the amount claimed.

3. The respondent company, through its Chief Executive Officer, admitted the debt owed to the operational creditor, acknowledging the outstanding salary dues of the applicant. The respondent attributed the non-payment to financial difficulties, including the corporate debtor's accounts becoming non-performing assets. The admission of debt by the respondent reinforced the applicant's case for insolvency proceedings.

4. The tribunal appointed an Interim Resolution Professional, Mr. V. Senthil Kumar, in compliance with the applicant's proposal. The appointed professional had a clean record with no disciplinary proceedings pending against him. The Interim Resolution Professional was tasked with managing the affairs of the corporate debtor during the insolvency resolution process.

5. A moratorium was declared under Section 14 of the Insolvency and Bankruptcy Code, imposing restrictions on legal actions against the corporate debtor, transfer of assets, enforcement of security interests, and recovery of property. Exceptions to the moratorium were specified, and the obligations of the surety in a contract of guarantee were clarified.

6. The Interim Resolution Professional was directed to carry out his functions diligently and in accordance with the provisions of the Code, Rules, and Regulations. The professional was empowered to seek cooperation from the corporate debtor's personnel and take necessary actions to protect the debtor's assets and preserve their value.

7. The tribunal instructed the communication of the order to the operational creditor, corporate debtor, and the appointed Interim Resolution Professional within a specified timeframe to ensure compliance and awareness of the proceedings.

8. Discrepancies in the statement of account were noted, and the Resolution Professional was tasked with resolving such issues with input from the ex-promoter/director of the corporate debtor. The petitioner was directed to provide funds to the Interim Resolution Professional for operational expenses, subject to adjustment by the Committee of Creditors.

This comprehensive analysis covers the key issues addressed in the judgment, detailing the legal proceedings and outcomes related to the application for Corporate Insolvency Resolution Process.

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