2020 (1) TMI 468 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment - existence of dispute or not - time limitation - HELD THAT - It has been concluded from the contentions of the corporate debtor that the corporate debtor has tried to create and raise a pre-existing dispute by asserting that the entire gamut of dispute is amongst the applicant and the corporate debtor with respect to the quality of the product being rendered by the applicant and by annexing the debit notes which were never issued to the applicant prior but were raised only after the issuance of the section 8 demand notice. The corporate debtor has not placed on record any document which exhibits the plausible dispute between the parties. Thus, there is no merit in the so-called dispute raised by the corporate debtor in reply to Section 8 demand notice and in the reply to the application. Further, this leaves no doubt that the default has occurred with respect to the payment of the operational debt of the applicant - thus, the application is complete as per the requirements of section 9 of the code. Further the date of default occurred from 31.08.2017 and hence the debt is not time barred and the application is filed within the period of limitation. Application admitted - moratorium declared.

Issues:
1. Application filed under section 9 of Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency process.
2. Dispute over outstanding payment between Applicant and Corporate Debtor.
3. Response to section 8 notice denying liability and alleging poor performance by Applicant.
4. Contradictory statements by Corporate Debtor regarding invoices and outstanding balance.
5. Admissibility of the application under section 9 of the Code.
6. Appointment of Insolvency Resolution Professional and deposit for expenses.
7. Imposition of moratorium under Section 14(1) of the Code.

Analysis:
1. The Applicant, a logistics service provider, filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency process against the Corporate Debtor, alleging non-payment of outstanding dues amounting to Rs. 33,69,997/-.
2. The Applicant claimed that despite providing services and raising invoices totaling Rs. 66,00,860/-, only partial payment of Rs. 35,68,484/- was received, with the remaining amount acknowledged by the Corporate Debtor but not paid.
3. In response, the Corporate Debtor denied the liability for the outstanding amount, citing settlement of dues and poor performance by the Applicant, leading to monetary losses and issuance of debit notes.
4. The Corporate Debtor's assertion of no outstanding balance was contradicted by the Applicant, who provided evidence of agreements and email confirmation of the pending amount, challenging the Corporate Debtor's claims.
5. The Tribunal found the application complete under section 9 of the Code, determining that the default occurred on 31.08.2017, within the limitation period, and establishing jurisdiction based on the Corporate Debtor's location in Delhi.
6. The Tribunal admitted the application, appointing an Insolvency Resolution Professional and directing the Applicant to deposit Rs. 2 lakhs for the IRP's expenses, subject to adjustment by the Committee of Creditors.
7. Consequently, the moratorium under Section 14(1) of the Code was imposed on the Corporate Debtor, prohibiting certain actions, with further provisions coming into force during the moratorium period, as stipulated in Sections 14(2) to 14(4) of the Code.

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