2020 (3) TMI 94 - 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 - On perusal of the reply filed by the corporate debtor it is also observed that more stress is made towards the issue of interest and the main defence raised by the corporate debtor that there is no agreement between the parties on payment of interest towards overdue payments as per the purchase orders placed on the operational creditor is illogical and without any justification - It is also a fact that amount is due and payable to the operational creditor which is above ₹ 1.00 lac as per section 4 of the I B Code and no dispute is ever raised by the corporate debtor nor the same is barred by law of limitation. This adjudicating authority is of the considered view that operational debt is due to the Applicant, 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 - . Here in this case the application is in proper format as prescribed under I B Code 2016 and is complete in all respect and is not barred by any law. It is a fit case to initiate Insolvency Resolution Process by admitting the Application under section 9(5)(1) of the Code - Petition admitted - moratorium declared.

Issues Involved:

1. Existence of operational debt and default.
2. Agreement on the payment of interest.
3. Acknowledgment of debt by the corporate debtor.
4. Validity and completeness of the application under the Insolvency and Bankruptcy Code, 2016.
5. Appointment of Interim Resolution Professional (IRP).
6. Declaration of moratorium and its implications.

Detailed Analysis:

1. Existence of Operational Debt and Default:

The applicant, an operational creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming an outstanding amount of ?87,45,963/- with interest, totaling ?1,33,49,908/-. The operational creditor supplied goods based on two purchase orders and raised ten invoices. The corporate debtor acknowledged the debt through an email dated 26.11.2017 and a Memorandum of Understanding (MOU) dated 05.12.2017, but failed to make the agreed payments.

2. Agreement on the Payment of Interest:

The corporate debtor contested the claim of interest, arguing that no agreement for payment of interest existed in the purchase orders. However, the Tribunal noted that each invoice issued by the operational creditor contained a clause stipulating interest @ 18% on overdue payments. The Tribunal cited the decision of the Bombay High Court in Jatin Koticha v. VFC Industries (P.) Ltd., affirming that invoices with terms and conditions, including interest, constitute a written contract.

3. Acknowledgment of Debt by the Corporate Debtor:

The corporate debtor acknowledged the debt in multiple instances, including an email dated 26.11.2017 and an MOU dated 05.12.2017. Additionally, the corporate debtor issued 19 undated cheques and admitted default in a communication dated 08.03.2018, requesting the operational creditor not to deposit the post-dated cheques. The Tribunal found these acknowledgments sufficient to establish the debt and default.

4. Validity and Completeness of the Application:

The Tribunal confirmed that the application was in the proper format as prescribed under the Insolvency and Bankruptcy Code, 2016, and was complete in all respects. The Tribunal referred to the Supreme Court judgments in Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. and Innoventive Industries v. ICICI Bank Ltd., which outline the criteria for admitting an application under Section 9 of the Code. The Tribunal found that the operational debt exceeded ?1.00 lakh, the debt was due and payable, and no dispute existed between the parties.

5. Appointment of Interim Resolution Professional (IRP):

The applicant proposed Mr. Umesh Ved as the Interim Resolution Professional (IRP). The Tribunal appointed him as the IRP under Section 13(1)(c) of the Code and directed him to make a public announcement of the initiation of the Corporate Insolvency Resolution Process (CIRP) and call for submission of claims as required by Section 15 of the Code.

6. Declaration of Moratorium and Its Implications:

The Tribunal declared a moratorium as per Section 14 of the Code, prohibiting the institution or continuation of suits or proceedings against the corporate debtor, transferring or disposing of assets, and recovery of property by owners or lessors. The moratorium ensures the supply of essential goods and services to the corporate debtor is not interrupted during the CIRP. The moratorium will remain effective until the completion of the CIRP, approval of the resolution plan, or an order for liquidation.

Conclusion:

The Tribunal admitted the petition, initiated the Corporate Insolvency Resolution Process, declared a moratorium, and appointed Mr. Umesh Ved as the Interim Resolution Professional. The petition was disposed of with no order as to costs, and a copy of the order was directed to be communicated to all relevant parties.

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