2020 (3) TMI 706 - 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 - The Applicant has established the existence of debt and default on the part of the Respondent. Since, the Respondent has nothing to offer as reply, this Tribunal initiates CIRP on the Respondent with immediate effect. Application admitted - moratorium declared.

Summary

Issues: Application for corporate insolvency resolution process under section 9 of the Insolvency and Bankruptcy Code, 2016 based on alleged default in settling payment for mobile phone supply.

Detailed Analysis:

1. Background and Transactions: The Applicant engaged in mobile phone trading, while the Respondent was involved in advertisement activities. The Respondent placed an order for 27,000 mobile phones but failed to pay the full amount of ?1,07,32,455/- for the delivered units as per agreed terms.

2. Payment Defaults and Reminders: Despite receiving reminders and demands for payment, the Respondent delayed settling the outstanding amount. The Applicant made efforts to recover the dues, including issuing demand notices and communication regarding outstanding payments.

3. Payment Plans and Non-Adherence: Various payment plans were proposed by the Respondent, but the Applicant found them unacceptable. The Respondent failed to adhere to the agreed payment schedules, leading to continued defaults in payment.

4. Legal Proceedings: The Applicant initiated legal action under section 9 of the Insolvency and Bankruptcy Code, 2016. The Respondent's legal counsel initially undertook to file a reply but later withdrew, leading to the closure of the right to file a response.

5. Judgment and Moratorium: The Tribunal found that the Applicant had established the debt and default on the part of the Respondent. Consequently, the Corporate Insolvency Resolution Process (CIRP) was initiated, imposing a moratorium under section 14 of the Code to protect the assets and interests of the Respondent during the resolution process.

6. Appointment of Interim Resolution Professional: The proposed Interim Resolution Professional (IRP) was confirmed by the Tribunal to oversee the resolution process, as per the statutory requirements outlined in sections 15, 17, and 18 of the Code. The IRP was directed to submit a report within 30 days to the Tribunal for further proceedings.