2020 (3) TMI 1061 - 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 Respondent company has failed to repay the outstanding amount of ₹ 39,84,788/- arising in usual and ordinary course of business and has become commercially insolvent - it is clear that the Corporate Debtor has defaulted in making payment in terms of the agreement to be paid to the Petitioner/Operational Creditor. Date of Default is on 01.04.2016. Application admitted - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Existence and amount of debt
3. Default and its date
4. Limitation period for filing the application
5. Admission of debt and dispute over interest
6. Appointment of Interim Resolution Professional (IRP)
7. Declaration of moratorium
8. Compliance with the Insolvency and Bankruptcy Code (IBC) provisions

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP against the Corporate Debtor.

2. Existence and amount of debt:
The Operational Creditor claimed an outstanding amount of ?39,84,788/-, which includes ?31,00,903/- as principal and ?8,83,855/- as interest at 18% per annum from 01.04.2017 to 30.10.2018. The Corporate Debtor admitted the principal amount but disputed the interest claim, stating there was no prior agreement for interest payment.

3. Default and its date:
The default occurred on 01.04.2016, as the Corporate Debtor failed to make payments as per the terms of the contract executed on 01.04.2014.

4. Limitation period for filing the application:
The application was filed on 08.01.2019, which is within the limitation period for initiating CIRP.

5. Admission of debt and dispute over interest:
The Corporate Debtor admitted the principal debt of ?31,00,903/- but contested the interest amount. The tribunal observed that there was no provision for interest on delayed payments in the contract.

6. Appointment of Interim Resolution Professional (IRP):
The Operational Creditor did not suggest any name for the IRP. Therefore, the tribunal appointed Shri Bhavan Trivedi as the IRP from the panel prepared by the IBBI.

7. Declaration of moratorium:
Upon admission of the petition, the tribunal declared a moratorium as per Sections 13 and 14 of the IBC, prohibiting:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Transfer or disposal of any assets of the Corporate Debtor.
- Foreclosure or enforcement of any security interest.
- Recovery of any property by an owner or lessor.

8. Compliance with the Insolvency and Bankruptcy Code (IBC) provisions:
The tribunal directed the IRP to adhere to the time limits for completing the CIRP and to perform all functions as per Sections 15, 17, 18, 19, 20, and 21 of the Code. The IRP was also instructed to protect and preserve the value of the Corporate Debtor's property.

Observations:
- The petition met all the requirements for initiation of CIRP.
- The Corporate Debtor did not raise any dispute regarding the operational debt or the quality of services.
- The tribunal noted the absence of an interest provision in the contract and did not recognize the interest claim.

Order:
- The petition was admitted, and the CIRP was initiated.
- A moratorium was declared.
- Shri Bhavan Trivedi was appointed as the IRP.
- The IRP was directed to make a public announcement of the moratorium and follow the provisions of the IBC.
- The tribunal emphasized the importance of a viable resolution plan and suggested exploring interest rates based on MCLR for the resolution plan.

Conclusion:
The tribunal admitted the petition for CIRP against the Corporate Debtor, declared a moratorium, and appointed an IRP, directing compliance with the IBC provisions to ensure a viable resolution plan.

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