2020 (3) TMI 487 - 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 Corporate Debtor has not produced any single documents to prove his part other than simply making submissions that the Corporate Debtor is in connivance with some dismissed employees - The Corporate Debtor also failed to prove that they have disputed the claims of the Operational Creditor earlier except in their reply to the demand notice served by the Operational Creditor. This led us to believe that the claim by the Corporate Debtor of a pre-existing dispute is a frivolous one and made only to evade the claims made by the Operational Creditor. Moreover, the corporate debtor other than simply making submission that statement showing the pending final amount due by both the parties relied upon by the Operational Creditor, is a fraudulent one , could not produce any documents or correspondence to prove that the sign off statement is not issued from their office. This bench cannot go with mere statements made by parties but decide only based on the record before us. Therefore, we have no choice to except to believe in what was submitted to us. The amount of debt claimed is ₹ 93,24,741.46/- which exceeds ₹ 1,00,000/- as per the requirement under section 4 of the I B Code 2016 and the application is within the purview of Section 9 of the I B Code, 2016 - It can be concluded that the instant Application is complete in all respects, therefore, deserves to be admitted. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Jurisdiction and maintainability of the application.
2. Existence of operational debt and default.
3. Pre-existing dispute between the parties.
4. Admissibility of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
5. Appointment of Interim Resolution Professional (IRP).

Detailed Analysis:

1. Jurisdiction and Maintainability of the Application:
The application was filed by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016, against the Corporate Debtor, a company registered under the Companies Act, 1956. The Corporate Debtor was incorporated on 21.02.1986 and has its registered office in Thiruvananthapuram, Kerala, thus falling within the territorial jurisdiction of the Tribunal.

2. Existence of Operational Debt and Default:
The Corporate Debtor placed multiple work orders with the Operational Creditor for various civil and interior works, with an aggregate value of ?6,20,34,674.21 excluding taxes. The Operational Creditor raised invoices periodically, and the Corporate Debtor made partial payments totaling ?5,97,48,529. The Corporate Debtor acknowledged the outstanding amount on 23.09.2015 and issued a Completion Certificate on 03.11.2015. Despite reminders and partial payments, an outstanding amount of ?93,24,741.46 remained unpaid.

3. Pre-Existing Dispute Between the Parties:
The Corporate Debtor argued that the application was not maintainable due to a pre-existing dispute, claiming no sanction for additional work and alleging fraudulent activities by some officers. The Corporate Debtor also disputed the authenticity of the signed agreement dated 23.09.2015. However, the Operational Creditor refuted these claims, providing email communications and partial payments as evidence of the Corporate Debtor's acknowledgment of the debt. The Tribunal found no substantial evidence of a pre-existing dispute, deeming the Corporate Debtor's claims as frivolous and made to evade payment.

4. Admissibility of the Application Under Section 9 of the Insolvency & Bankruptcy Code, 2016:
The Tribunal concluded that the application was complete in all respects and met the requirements under Section 9 of the Code. The debt amount claimed exceeded the threshold of ?1,00,000, and there was no credible evidence of a pre-existing dispute. The Tribunal found that the Corporate Debtor's arguments were unsupported by substantial documentation, leading to the admission of the application.

5. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Renahan Vamakeshan as the Interim Resolution Professional (IRP) to carry out the functions under the Insolvency & Bankruptcy Code. The Operational Creditor was directed to deposit ?2 lakhs with the IRP to cover initial expenses, subject to adjustment by the Committee of Creditors.

Order:
The application IBA/42/KOB/2019 was admitted, and a moratorium was declared prohibiting:
(a) Institution or continuation of suits/proceedings against the Corporate Debtor.
(b) Transfer, encumbrance, alienation, or disposal of the Corporate Debtor's assets.
(c) Foreclosure, recovery, or enforcement of any security interest.
(d) Recovery of property by an owner or lessor occupied by the Corporate Debtor.

The moratorium would remain effective until the completion of the Corporate Insolvency Resolution Process or approval of the resolution plan or liquidation order. The Tribunal directed immediate public announcement of the Corporate Insolvency Resolution Process and communication of the order to relevant parties.