2020 (3) TMI 29 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT - On perusal of the record it is found that for the first time the matter was notified on 13.03.2019. Since then, the matter was notified for hearing on different dates, but the respondent never appeared either in person or through advocate before the bench nor submitted any reply despite notice issued by the applicant as well as the Registry. The Adjudicating Authority passed an order on 23.07.2019 for paper publication. Since service is complete, the matter has been heard in absence of the corporate debtor. This adjudicating authority is of the considered view that operational debt is due to the Applicant. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default - the Application filed by the Applicant is complete in all respects. Petition is admitted - moratorium declared.

Summary

Issues Involved:
1. Existence of operational debt exceeding ?1.00 lakh.
2. Documentary evidence showing the debt is due and payable.
3. Existence of a dispute or pending suit/arbitration before the demand notice.

Detailed Analysis:

Existence of Operational Debt:
The applicant, an operational creditor, supplied goods to the respondent, a corporate debtor, based on purchase orders. The respondent initially made payments but later defaulted, leaving an outstanding amount of ?1,91,40,826. Despite repeated reminders and legal notices, the debt remained unpaid. The applicant also highlighted a settlement agreement dated 11.05.2018, where the respondent acknowledged the debt and issued post-dated cheques, which were dishonored, leading to a total due amount of ?3,51,02,340.

Documentary Evidence:
The applicant submitted various documents, including Form No. 5, supporting affidavits, board resolutions, orders from the Commercial Court, settlement agreements, computation of the amount and dates of default, bank statements, legal notices, and demand notices. These documents provided evidence that the debt was due and payable but remained unpaid.

Existence of Dispute:
The respondent did not appear before the tribunal nor submitted any reply despite notices. The tribunal noted that no dispute was raised by the respondent regarding the debt. The tribunal also considered the Hon'ble Supreme Court judgment and provisions of the Insolvency & Bankruptcy Code, concluding that the operational debt was due and there was no dispute.

Judgment:
The tribunal found that the application was complete in all respects and the operational creditor had established the existence of debt and occurrence of default. The tribunal appointed an Interim Resolution Professional (IRP) and initiated the Insolvency Resolution Process. A moratorium was declared prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the corporate debtor. The tribunal directed that the supply of essential services to the corporate debtor should not be interrupted during the moratorium period. The order of moratorium would be effective until the completion of the corporate insolvency resolution process or until a resolution plan is approved or liquidation is ordered. The petition was disposed of with no order as to costs, and the registry was directed to inform the Registrar of Companies about the corporate insolvency resolution process to prevent detrimental actions against the respondent company.