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2020 (1) TMI 303 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor defaulted in paying an amount - existence of debt and default or not - HELD THAT - Ever since, this Corporate Debtor having not paid the award amount despite the Operational Creditor giving additional time to settle the dues and reminded the Corporate Debtor to pay the claim amount to the Operational Creditor, finally, when no payment came from the Corporate Debtor, this Operational Creditor issued Section 8 Notice on 12.01.2019 by hand demanding payment of the amount aforesaid. On receipt of Section 8 notice, on the same day, i.e. on 12.01.2019, the Corporate Debtor replied admitting the liability that this Corporate Debtor owed to pay ₹ 5,71,515 to the Operational Creditor, but sought additional time to pay this claim to the Operational Creditor. This Operational Creditor has proved existence of debt and default, therefore, this Company Application is admitted by appointing Mr. Senthil Kumar as Insolvency Resolution Professional (IRP) looking at the consent given by the Operational Creditor stating that this Operational Creditor would pay remuneration to the IRP and the expenditure thereto until constitution of CoC. Application admitted - moratorium declared.
Issues:
Insolvency & Bankruptcy Application under Section 9 of the Insolvency & Bankruptcy Code, 2016 for default in payment by the Corporate Debtor. Analysis: The judgment revolves around an Insolvency & Bankruptcy Application (IBA) filed under Section 9 of the Insolvency & Bankruptcy Code, 2016 by an Operational Creditor against a Corporate Debtor for failing to pay an amount of ?12,40,000 as per the Company Application. The Operational Creditor had supplied electrical goods to the Corporate Debtor based on a Purchase Order dated 30.06.2011, and an invoice was raised for the same on 15.03.2012. Despite partial payment by the Corporate Debtor, a significant balance of ?5,71,515 remained unpaid. Subsequently, proceedings were initiated before the Madhya Pradesh Micro and Small Enterprises Facilitation Council, resulting in an award in favor of the Operational Creditor for the outstanding amount. Moreover, the Corporate Debtor, despite admitting the liability, failed to settle the dues, prompting the Operational Creditor to issue a Section 8 Notice demanding payment. The Corporate Debtor acknowledged the debt but cited financial difficulties as the reason for non-payment. The Tribunal, after assessing the evidence presented, concluded that the Operational Creditor had established the existence of debt and default, leading to the admission of the Company Application. The Tribunal appointed an Insolvency Resolution Professional (IRP) and imposed a moratorium to protect the assets of the Corporate Debtor during the insolvency resolution process. The directions issued by the Tribunal during the admission of the IBA/728/2019 included declaring a moratorium on various actions against the Corporate Debtor, ensuring the continuity of essential goods or services supply, and specifying the duration of the moratorium until the completion of the insolvency resolution process or liquidation approval. Additionally, the appointment of an Interim Resolution Professional was made to oversee the resolution process. The Registry was instructed to communicate the order to all relevant parties promptly, marking a significant step towards initiating the Corporate Insolvency Resolution Process. This detailed analysis of the judgment highlights the legal proceedings, evidence presented, admission of the Company Application, imposition of a moratorium, and the subsequent directions issued by the Tribunal to facilitate the insolvency resolution process effectively.
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