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2020 (4) TMI 504 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - operational debt exceeding ₹ 1 Lakh or not - existence of debt and dispute or not - HELD THAT - The existence of a dispute between the parties or a record of pendency of a suit or arbitration should be filed before the receipt of the Demand notice of the unpaid Operational Debt. Admittedly, in this case, the Demand notice was issued to the Corporate Debtor on 1-5-2019 to which the Corporate Debtor has admitted his liability and has also stated that they have not filed any appeal against the award of the Arbitrator. It is an admitted fact that only after filing of the petition, the Corporate Debtor has filed the O.P. No. 549 of 2019 challenging the arbitral award which cannot be considered as a pre-existing dispute as contended by the Ld. Counsel for the Corporate Debtor in view of the above stated facts. Hence, there are no merit in the submissions made by the Ld. Counsel for the Corporate Debtor and therefore the application filed by the Corporate Debtor stands dismissed. From the documents produced on record, it is evident that the claim falls within the period of limitation of 3 years and is not barred by limitation. The claim amount as made in the petition is also in excess of ₹ 1,00,000/- being the statutory minimum amount fixed under section 4 of the IBC, 2016 for approaching this Tribunal by the creditors, in the instant case by an Operational Creditor - the Application as has been filed by the Operational Creditor is admitted and consequently Corporate Insolvency Resolution Process is initiated - petition admitted - moratorium declared.
Issues Involved:
1. Maintainability of the petition. 2. Limitation period for filing the petition. 3. Existence of operational debt and default. 4. Existence of a pre-existing dispute. 5. Appointment of Interim Resolution Professional (IRP). 6. Initiation of Corporate Insolvency Resolution Process (CIRP). 7. Effect of moratorium. Issue-wise Detailed Analysis: 1. Maintainability of the Petition: The Corporate Debtor filed MA/962/2019 challenging the maintainability of CP/1305/IB/2018, citing a pending statutory appeal under section 34 of the Arbitration and Conciliation Act, 1996. The Tribunal noted that the arbitral award was passed on 23-10-2017, the demand notice was issued on 1-5-2018, and the CP/1305/IB/2018 was filed on 30-10-2018. The Corporate Debtor’s appeal (O.P. No. 549/2019) was filed only after the CP/1305/IB/2018, which does not constitute a pre-existing dispute as per the Supreme Court’s criteria in Vijay Nirman Co. (P.) Ltd. Hence, the Tribunal dismissed MA/962/2019, affirming the maintainability of the petition. 2. Limitation Period for Filing the Petition: The Tribunal confirmed that the claim falls within the three-year limitation period and is not barred by limitation. The claim amount exceeds the statutory minimum of ?1,00,000/- as required under section 4 of the IBC, 2016. 3. Existence of Operational Debt and Default: The Operational Creditor claimed an amount of ?1,52,74,938/- including interest up to 30-4-2018. The Tribunal found that the Corporate Debtor admitted its liability in its reply to the demand notice and proposed to settle the amount in 20 equated monthly installments. This admission and the subsequent proposal for settlement confirmed the existence of operational debt and default. 4. Existence of a Pre-existing Dispute: The Tribunal emphasized that the Corporate Debtor’s challenge to the arbitral award was filed after the CP/1305/IB/2018, and thus, it cannot be considered a pre-existing dispute. The Corporate Debtor’s reply to the demand notice also indicated an intention to honor the award, further negating the existence of a pre-existing dispute. 5. Appointment of Interim Resolution Professional (IRP): Since the Operational Creditor did not name an IRP, the Tribunal appointed Mr. Sundararaman Natarajan as the Interim Resolution Professional, ensuring no disciplinary proceedings were pending against him and that necessary disclosures were made within a week. 6. Initiation of Corporate Insolvency Resolution Process (CIRP): The Tribunal admitted the application under section 9(5) of IBC, 2016, and initiated the Corporate Insolvency Resolution Process against the Corporate Debtor. The Tribunal directed the Operational Creditor to pay ?2,00,000/- to the IRP for expenses related to performing assigned functions. 7. Effect of Moratorium: The Tribunal imposed a moratorium as per section 14(1) of the IBC, 2016, which includes: a. Suspension of suits or proceedings against the Corporate Debtor. b. Prohibition on transferring or disposing of assets. c. Prohibition on foreclosure or enforcement of security interests. d. Prohibition on recovery of property by owners or lessors. During the moratorium, essential goods or services to the Corporate Debtor cannot be terminated or interrupted, and the moratorium will last until the completion of the CIRP or until an order for liquidation or approval of a resolution plan is passed. Conclusion: The Tribunal admitted CP/1305/IB/2018, initiated CIRP against the Corporate Debtor, appointed an IRP, and imposed a moratorium. The Tribunal dismissed the Corporate Debtor’s challenge on maintainability and confirmed that the petition was filed within the limitation period, with no pre-existing dispute.
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