2020 (4) TMI 507 - 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 - There is no pre-existing dispute regarding the unpaid operational debt, being the principal amount of ₹ 6,10,42,439.00. The invoices for the period of 2-11-2015 to 25-6-2018 were raised upon the Corporate Debtor on a running account basis, but the outstanding dues were not paid. Thus, the existence of debt and default is established. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition - Petition admitted - moratorium declared.

Summary

Issues:
Company petition under section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC) for Corporate Insolvency Resolution Process (CIRP) against a private company.

Detailed Analysis:

1. Operational Debt and Default:
The Operational Creditor filed a petition seeking initiation of CIRP against the Corporate Debtor for an operational debt of ?6,10,42,439.00. Invoices for supply of goods remained unpaid, and a demand notice was served on the Corporate Debtor, which did not reply. A payment received was adjusted towards the outstanding amount, confirming the debt. The Corporate Debtor acknowledged the debt in the Confirmation of Accounts. The Operational Creditor affirmed that no dispute existed regarding the unpaid operational debt.

2. Jurisdiction and Compliance:
The Corporate Debtor, a private company, was incorporated under the Companies Act, 1956, with jurisdiction under the National Company Law Tribunal, Mumbai. The petition was complete as per legal requirements, demonstrating the default exceeding the minimum amount stipulated under the IBC.

3. Legal Proceedings and Settlement Attempts:
The case underwent multiple hearings with opportunities given for settlement, which the Corporate Debtor failed to utilize. The Operational Creditor provided all necessary documentation, including invoices, demand notices, and confirmation of accounts. The Corporate Debtor did not file a reply to the petition despite being served in advance.

4. Admission of Petition and Moratorium:
The Adjudicating Authority admitted the petition, ordering the initiation of CIRP against the Corporate Debtor. A moratorium under section 14 of the IBC was imposed, suspending legal actions against the Corporate Debtor and restricting asset transfers. Essential goods or services supply to the Corporate Debtor was to continue during the moratorium.

5. Appointment of Interim Resolution Professional (IRP):
An Interim Resolution Professional was appointed to manage the affairs of the Corporate Debtor during the CIRP period. The IRP was tasked with specific functions under the IBC, subject to IBBI regulations. The management of the Corporate Debtor vested in the IRP during the CIRP, with obligations on officers and managers to provide necessary information.

6. Operational Creditor Responsibilities:
The Operational Creditor was directed to deposit a sum with the IRP for expenses related to public notices and claims. Compliance reports were to be submitted to the Registry, and communication of the order was to be sent to relevant parties promptly.

7. Conclusion:
The Tribunal admitted the petition for CIRP against the Corporate Debtor, establishing the debt and default. The order included provisions for the moratorium, appointment of an IRP, and directives for compliance and communication among involved parties.