2020 (4) TMI 310 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - It is submitted that there is a specific prayer contained under section 16G of the of the Tea Act, 1953 read with Section 16M of the Tea Act, 1953, and that the application is not maintainable because the Corporate Debtor is a Tea Company - HELD THAT - The record is very much clear as regards supplies and payments received. The letter dated 13th January, 2016 as regards outstanding and overdue bills was duly received by the Corporate Debtor but no reply thereto was sent. No dispute as regards the payment due mentioned by the Operational Creditor in the aforesaid letter dated 13th January, 2016 was raised and the amount was not denied. In these circumstances, we can accept it as acknowledgement of its liability by the Corporate Debtor because it was duly received and signed by somebody on behalf of the Corporate Debtor and stamped with its official seal. There is no substance in the reply of the Corporate Debtor sent to the Operational Creditor in response to its demand notice - There does not seem to be any plausible defence on the side of the Corporate Debtor in the light of all the documents placed on record and referred to by the Operational Creditor. The Operational Creditor has not proposed the name of any IRP. The application filed by the Operational Creditor under section 9 of the Insolvency Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, M/s. Duncans Industries Limited is hereby admitted - Moratorium is declared for the purposes referred to in section 14 of the Insolvency Bankruptcy Code, 2016.

Issues:
1. Initiation of Corporate Insolvency Resolution Process under section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Dispute regarding unpaid operational debt and default date.
3. Maintainability of the application due to pre-existing disputes and statutory provisions.
4. Examination of evidence and acknowledgment of liability by the Corporate Debtor.
5. Consideration of defense raised by the Corporate Debtor.
6. Appointment of Interim Resolution Professional and procedural directions.

Issue 1: Initiation of Corporate Insolvency Resolution Process
The petition was filed by the Operational Creditor seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor under section 9 of the Insolvency & Bankruptcy Code, 2016. The Operational Creditor provided detailed evidence of the transactions, invoices, and correspondence to support the claim of unpaid operational debt amounting to ?23,75,812. The Tribunal admitted the application and declared a moratorium in accordance with the relevant sections of the IBC.

Issue 2: Dispute regarding unpaid operational debt
The Corporate Debtor raised disputes regarding the unpaid debt, alleging poor quality of goods supplied and subsequent losses incurred. However, the Tribunal found no substantial defense in the Corporate Debtor's response, especially considering the lack of mention of disputes in the reply to the demand notice. The Tribunal noted the acknowledgment of liability by the Corporate Debtor based on the evidence provided by the Operational Creditor.

Issue 3: Maintainability of the application
The Corporate Debtor contended that the application was not maintainable due to the pre-existence of disputes and statutory provisions, including those under the Tea Act, 1953. However, the Tribunal dismissed these contentions and found the application to be complete and deserving of consideration based on the evidence presented.

Issue 4: Examination of evidence and acknowledgment of liability
The Tribunal thoroughly examined the ledger accounts, correspondence, and responses from both parties. The letter dated 13th January, 2016, regarding outstanding bills and the lack of a disputing response from the Corporate Debtor were crucial in establishing the acknowledgment of liability. The Tribunal found the evidence compelling and accepted it as an acknowledgment of the debt by the Corporate Debtor.

Issue 5: Consideration of defense raised by the Corporate Debtor
The defense raised by the Corporate Debtor, including claims of poor quality goods and disputes, was deemed unsubstantial by the Tribunal. The lack of mention of disputes in the relevant communications and the evidence provided by the Operational Creditor led the Tribunal to reject the defense raised by the Corporate Debtor.

Issue 6: Appointment of Interim Resolution Professional
The Tribunal appointed an Interim Resolution Professional to ascertain creditor particulars, convene a Committee of Creditors, and oversee the resolution process. Procedural directions were issued, including the deposit of funds by the Operational Creditor for preliminary expenses and the communication of the order to all relevant parties. The matter was listed for a progress report on a specified date.

This comprehensive summary covers the key issues addressed in the judgment, detailing the arguments, evidence, and decisions made by the Tribunal in the case.

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