2020 (4) TMI 312 - 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 - In the present case it is seen that there is a clear admission of non-payment of balance part debt and therefore there has been occurrence of default in payment of the claimed debt by the respondent corporate debtor - n the present case admittedly the demand notice in Form-3 as per section 8 of the Code was sent on 27-9-2019. It is thus seen that before filing the present application under section 9 of the Code, requisite notice under section 8 was duly served on the Respondent. In response to section 8 notice, respondent corporate debtor replied on 07-10-2019 acknowledging the outstanding amount and expressed its inability to pay the debt due to financial difficulty. In other words, the corporate debtor had not disputed the claim in its reply given in terms of sub-section (2) of section 8 of the Code. It is seen that the application preferred by applicant operational creditor is complete in all respect. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the applicant operational creditor. Respondent company also did not raise any dispute regarding the existence of operational debt. In fact, the claim of default committed by the corporate debtor has not been denied. Once the application is complete and in the absence of any dispute and with the subsistence of default, the application is liable to be admitted - on fulfilment of requirements of section 9 (5) (i) (a) to (d) of the Code, the present application is admitted. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Jurisdiction and Admissibility of Application
2. Existence of Operational Debt and Default
3. Compliance with Procedural Requirements under Section 9 of the Insolvency and Bankruptcy Code, 2016
4. Appointment of Interim Resolution Professional
5. Declaration of Moratorium

Issue-wise Detailed Analysis:

1. Jurisdiction and Admissibility of Application:
The application was filed under section 9 of the Insolvency and Bankruptcy Code, 2016, read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by the operational creditor against the respondent company. The respondent company is incorporated under the Companies Act, 1956, with its registered office in New Delhi, thus falling under the territorial jurisdiction of the National Company Law Tribunal, New Delhi, in accordance with sub-section (1) of section 60 of the Code.

2. Existence of Operational Debt and Default:
The applicant supplied 3,64,500 kgs of Arecanuts to the respondent corporate debtor in June 2016, amounting to ?9,74,37,329/-. Partial payments totaling ?8,42,99,990/- were made, leaving an outstanding amount of ?1,31,37,429/-. The respondent admitted the outstanding debt and sought additional time for payment due to financial difficulties. The Tribunal noted that "default" under section 3(12) includes non-payment of debt once it becomes due and payable, even if partially. The respondent's admission of non-payment constituted a clear occurrence of default.

3. Compliance with Procedural Requirements under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The applicant issued a demand notice in Form-3 on 27-09-2019, as required under section 8 of the Code. The respondent acknowledged the debt and expressed financial difficulties in response, without disputing the claim. The application under section 9 was filed in requisite Form-5, which included all necessary documents such as invoices, ledger accounts, financial statements, and bank statements. The application was deemed complete, satisfying the requirements of section 9(3) and section 9(5) of the Code.

4. Appointment of Interim Resolution Professional:
The petitioner proposed Mr. Vikram Singh Rathore as the Interim Resolution Professional (IRP), with a declaration that no disciplinary proceedings were pending against him. The Tribunal appointed Mr. Rathore as the IRP, directing the petitioner to pay ?1 lakh to meet the expenses for performing his functions, subject to adjustment by the Committee of Creditors.

5. Declaration of Moratorium:
The Tribunal declared a moratorium under section 14 of the Code, effective from the date of the order until the completion of the Corporate Insolvency Resolution Process. The moratorium included prohibitions on:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transferring, encumbering, or disposing of assets of the corporate debtor.
- Actions to foreclose or enforce security interests.
- Recovery of property occupied by the corporate debtor.

The Tribunal clarified that the moratorium does not apply to transactions notified by the Central Government or the supply of essential goods or services to the corporate debtor. The IRP was directed to perform duties under sections 15, 17, 18, 19, 20, and 21 of the Code, with all personnel connected to the corporate debtor required to cooperate with the IRP.

Conclusion:
The application was admitted, and the Corporate Insolvency Resolution Process commenced from the date of the order. The IRP was appointed, and a moratorium was declared to facilitate the resolution process. The Tribunal directed communication of the order to relevant parties and authorities, including updating the status of the corporate debtor on the Registrar of Companies' website.