2020 (4) TMI 207 - 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 - It is found that Manager of the respondent company appeared and fairly admitted the debt - it is also found that the instant petition filed by the applicant is well within limitation and there is no denial of the operational debt and/or any pre-existing dispute regarding the operational debt from the corporate debtor. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt to the Applicant - In the instant case, the documents produced by the operational creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'operational debt' - Also, the corporate debtor has never raised any dispute on issuance of notice u/s 8 of the I B Code nor have ever raised any dispute prior to the issuance of notice. The corporate debtor has committed default in payment of operational debt and, therefore, 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.

Summary

Issues:
- Petition filed under section 9 of The Insolvency and Bankruptcy Code, 2016
- Existence of operational debt and default in payment
- Admittance of debt by the respondent company
- Dispute resolution and initiation of corporate insolvency resolution process
- Appointment of Interim Resolution Professional

Analysis:
1. The petitioner, an operational creditor, filed a petition under section 9 of The Insolvency and Bankruptcy Code, 2016, claiming an overdue amount against the respondent, a corporate debtor, for services provided as a broker/commission agent. The debt of ?4,20,000 along with interest was stated to be outstanding from 1st April 2018 to 31st March 2019.

2. The respondent, acknowledging the debt, cited financial instability and adverse market conditions as reasons for non-payment. The respondent admitted the operational debt and expressed no objection to initiating the corporate insolvency resolution process.

3. The Tribunal found that the petition was within the limitation period, and there was no denial or dispute regarding the operational debt from the corporate debtor. The documents provided by the operational creditor established the debt and default on the part of the corporate debtor in payment.

4. Referring to the Supreme Court judgment in Mobilox Innovative (P.) Ltd. v. Kirusa Software (P.) Ltd., the Tribunal assessed the conditions for admitting the application, including the existence of operational debt exceeding ?1.00 lac, documentary evidence of the debt, and absence of disputes or pending legal actions.

5. The Tribunal concluded that the operational debt was due, the applicant fulfilled the requirements of the Insolvency & Bankruptcy Code, and the respondent did not raise any disputes. Hence, the Tribunal declared a moratorium, initiated the corporate insolvency resolution process, and appointed an Interim Resolution Professional.

6. The moratorium order prohibits legal actions against the corporate debtor, asset transfers, and enforces the supply of essential services during the resolution process. The appointed Interim Resolution Professional was tasked with managing the resolution process effectively.

7. The Tribunal directed communication of the order to the parties involved and emphasized the importance of maintaining the corporate debtor's status during the resolution process to safeguard stakeholders' interests and facilitate the realization of assets for all parties involved.