2020 (2) TMI 913 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Existence of debt and dispute or not - HELD THAT - The application under section 9 of the IBC, 2016, was filed by the applicant to initiate CIRP. The said notice was accepted by the Corporate Debtor. After the service of said notice, the respondents have caused appearance in the matter and have filed their reply, in its reply to the present section 9 application, the respondent states that due to financial problems and hardship, the company is facing hardship and is not in a position to honor its financial commitments. In such a situation the company has no alternative but to submit to resolution process. The applicant has filed an affidavit under section 9(3)(b) stating that no notice of dispute from Corporate Debtor is received - We are satisfied that the present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted. Application admitted - moratorium as envisaged under the provisions of section 14(1) shall follow in relation to the Respondent prohibiting the respondent as per proviso (a) to (d) of section 14(1) of the Code.

Summary

Issues:
1. Application under section 9 of Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process (CIRP) initiation.
2. Default in payment by the Corporate Debtor against invoices raised by the Operational Creditor.
3. Response of the Corporate Debtor to the demand notice under section 8 of IBC, 2016.
4. Appointment of Interim Resolution Professional and deposit of funds by Operational Creditor.
5. Moratorium and communication of order to relevant parties.

Analysis:
1. The application was filed under section 9 of the Insolvency and Bankruptcy Code, 2016 by M/s. Bhupindra Agro Private Limited to initiate the Corporate Insolvency Resolution Process against M/s. Shri Vardhman Rice Mills Pvt. Ltd. The Operational Creditor alleged non-payment of dues amounting to ?5,01,360 by the Corporate Debtor despite multiple invoices and reminders.

2. The Operational Creditor detailed the series of invoices issued and the lack of response or payment from the Corporate Debtor. The Operational Creditor sent a demand notice under section 8 of the Code, demanding ?6,21,704 (including interest) to be paid within 10 days. The Respondent failed to comply, leading to the application for CIRP initiation.

3. The Corporate Debtor, in response, cited financial difficulties as the reason for non-payment and expressed willingness to submit to the resolution process due to hardship faced by the company. The applicant confirmed no notice of dispute was received from the Corporate Debtor.

4. The Tribunal admitted the application after finding the Operational Creditor entitled to claim its dues and establishing the default in payment beyond doubt. An Interim Resolution Professional, Mr. Vikas Garg, was appointed, and the Operational Creditor was directed to deposit ?1 lakh with him to cover expenses. The moratorium under section 14(1) of the Code was imposed on the Respondent.

5. The Tribunal directed the registry to communicate the order to all relevant parties promptly and update the status of the Corporate Debtor on the Registrar of Companies' website. The order was to be supplied to all concerned parties for compliance and information.

This detailed analysis covers the key issues and outcomes of the judgment delivered by the Tribunal regarding the application for CIRP initiation and related proceedings under the Insolvency and Bankruptcy Code, 2016.