2020 (6) TMI 596 - 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 - In pursuant to the corporate debtor after the receipt of the demand notice is required to raise the dispute within ten days from the receipt of demand notice either the existence of dispute or show the documents that the payment of the unpaid operational debt has already been made. And if the corporate- debtor fails to raise the existence of disputes and documents showing the payment has not been paid operational debt then the operational-creditor has right to file an application under section 9 of the Insolvency and Bankruptcy, Code, 2016. The corporate debtor has failed to raise any existence of disputes and show that the operational debt raised by the operational-creditor has been paid. So under such circumstances there is no option, but to pass the order under section 9(5)(i) if the application is complete and from the perusal of the application we find that the application is complete and there is no payment of unpaid operational debt and no notice of dispute has been raised by the operational creditor or there is no record of dispute in the information utility. 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:
- Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of corporate insolvency process.
- Dispute over unpaid debt between operational creditor and operational debtor.
- Dishonoured cheques and subsequent legal actions.
- Compliance with provisions of the Code for admission of the application.
- Appointment of interim resolution professional and initiation of corporate insolvency resolution process.
- Declaration of moratorium and its implications.
- Duties and obligations of the interim resolution professional.

Analysis:
1. The judgment pertains to an application filed under section 9 of the Insolvency and Bankruptcy Code, 2016 seeking the initiation of the corporate insolvency resolution process against an operational debtor. The operational creditor, M/s. Dhingra Trading Co., claimed an outstanding sum of ?51,30,000 along with interest from the operational debtor, M/s. Amazing India TV P. Ltd., for the supply of chairs. The operational debtor failed to make the payment despite assurances and dishonoured cheques, leading to the legal dispute.

2. The operational creditor provided evidence of the debt owed, including invoices and correspondence, and followed the necessary legal procedures by sending a demand notice to the operational debtor. The operational debtor did not respond to the demand notice or raise any disputes within the stipulated period, as required by the Code, thereby leading to the admission of the application under section 9(5)(i) of the Code by the Tribunal.

3. Upon admission of the application, the Tribunal appointed an interim resolution professional, Mr. Rajiv Malik, to oversee the corporate insolvency resolution process. The operational creditor was directed to pay a sum to the interim resolution professional for expenses, subject to adjustment by the committee of creditors. Additionally, a public announcement was mandated, and a moratorium was declared from the date of the order until the completion of the resolution process, with specific prohibitions outlined under section 14 of the Code.

4. The interim resolution professional was tasked with various responsibilities under the Code, including managing the affairs of the corporate debtor, ensuring cooperation from relevant parties, and preserving the value of the debtor's property. The judgment emphasized the importance of adherence to the Code, Rules, and Regulations by all involved parties and highlighted the legal obligations imposed on personnel associated with the corporate debtor.

5. The Tribunal directed the communication of the order to the operational creditor, operational debtor, interim resolution professional, and Registrar of Companies for necessary updates and public notification. The judgment underscored the significance of compliance with the Code's provisions, the appointment of competent professionals, and the enforcement of legal obligations to facilitate the corporate insolvency resolution process effectively.