2020 (5) TMI 273 - 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 - HELD THAT - This Bench is of the view that the averments regarding the dispute raised by the corporate debtor with respect to the usage of sub-standard quality material, is not supported by any documentary evidence. Therefore, the dispute raised by the corporate debtor does not merit any further consideration. The operational creditor has established the default on the part of corporate debtor in payment of the operational debt. The petition filed under section 9 fulfils all the requirements of law - Therefore, the petition is admitted in terms of section 9(5) of the IBC. Application admitted - moratorium declared.

Summary

Issues:
- Petition filed under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) for initiation of corporate insolvency process.
- Dispute regarding payment default by the corporate debtor.
- Examination of evidence supporting the dispute raised by the corporate debtor.
- Admission of the petition, initiation of Corporate Insolvency Resolution Process (CIRP), and declaration of moratorium.
- Appointment of an Interim Resolution Professional (IRP) and deposit for immediate expenses.

Analysis:

The petition was filed under section 9 of the IBC, 2016 by the operational creditor against the corporate debtor, alleging a default in payment. The operational creditor had entered into a contract with the corporate debtor for construction works, raising a total of 18 RA Bills for the work executed. The last part payment received was mentioned, and the outstanding liability excluding interest was specified. The operational creditor sent a demand notice under section 8 of the IBC, 2016, which was replied to by the corporate debtor raising objections and citing disputes regarding service tax rate, payment-related issues, and quality of materials used in construction.

During the proceedings, the corporate debtor failed to provide evidence supporting the disputes raised, and the Bench found no documentary evidence backing the claim of sub-standard quality material usage. Consequently, the dispute raised by the corporate debtor was not considered further. The Bench concluded that the operational creditor had established the default in payment by the corporate debtor, meeting all legal requirements. The petition was admitted under section 9(5) of the IBC, initiating the CIRP and declaring a moratorium under section 14 of the Code.

An Interim Resolution Professional (IRP) was appointed based on the list provided by IBBI, with specific directions to fulfill the obligations under the IBC, 2016. The operational creditor was directed to deposit a specified amount for the immediate expenses of the IRP. The admission of the application under section 9(5) of the IBC, 2016 led to the enforcement of the moratorium, with communication of the order to all relevant parties and authorities for further action and record-keeping.