2020 (9) TMI 1078 - 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 - Section 9 of the IBC Code 2016 says that after the expiry of period of 10 days from the date of delivery of the notice or invoice demanding payment under Section 8(1) IBC. if the Operational Creditor does not receive the payment from the Corporate Debtor or notice of the dispute has not been raised by the Corporate Debtor then the Operational Creditor may file an application before the Adjudicating Authority. Corporate Debtor has not raised the dispute or notice of dispute as required under Section 8(2) of the IBC within 10 days from the date of receipt of demand notice hence, of course, after filing the reply to the demand notice he has raised dispute that Operational Creditor has charged abnormal, unjust and exorbitantly high price from the Corporate Debtor for the service and in support of that they have enclosed the What's app communication being made between tone VM and Hindustan Naresh Yadav since, notice of dispute has not been raised within the period prescribed under Section 8(2) of the IBC, therefore, in our considered view that cannot be taken into consideration when the Corporate Debtor in response to summons appear and filed the reply. The Corporate Debtor has not denied this fact that service has been rendered by the Operational Creditor the only grievance of the Corporate Debtor is that Operational Creditor has charged abnormal, unjust and exorbitantly high price from the Corporate Debtor, we have already held that Corporate Debtor has not raised the dispute by filing reply within 10 days as prescribed under Section 8(2) of the IBC, rather filed the reply after 10 days of the delivery of demand notice. Moreover, we held that What's app communication is in between Hindustan Media Ventures Ltd. and Corporate Debtor and not with the Operational Creditor and except that there is no other document to show that record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute. In view of Section 9(5)(i)IBC, the Adjudicating Authority has to see that the application is complete and there is no payment of the unpaid operational debt. the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor and no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility and if these are established by the Operational Creditor then Adjudicating Authority has no option but to admit the application - in the case in hand it has been established by the Operational Creditor that there is no payment of unpaid operational debt, the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor and no notice of dispute has been received by the operational creditor within 10 days from the receipt of demand notice or record of dispute in the information utility. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016.
2. Dispute over the amount due and payable under the invoices raised by the Operational Creditor.
3. Compliance with procedural requirements under Sections 8 and 9 of IBC.
4. Validity of the demand notice and the response time by the Corporate Debtor.
5. Examination of the WhatsApp communications and other evidence provided by the Corporate Debtor.
6. Appointment of an Interim Resolution Professional (IRP) and related procedural directions.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of IBC, 2016:
The petition was filed by the Operational Creditor, Totem Media Solutions Private Limited, to initiate CIRP against the Corporate Debtor, V2 Retail Limited, due to unpaid operational debt. The Operational Creditor is engaged in selling advertising print space, and the Corporate Debtor had placed orders for such services from July 2018 to May 2019.

2. Dispute over the Amount Due and Payable:
The Operational Creditor raised 24 invoices amounting to ?82,10,374/- plus interest of ?4,51,022/-, totaling ?86,61,396/-. Despite several reminders, the dues remained unpaid. The Corporate Debtor contended that the invoices reflected excessive and arbitrary rates and were not acknowledged or signed by any representative of the Corporate Debtor.

3. Compliance with Procedural Requirements under Sections 8 and 9 of IBC:
The Corporate Debtor argued that the application suffered from material irregularities, including non-compliance with Section 9(3)(c) and a false affidavit under Section 9(3)(b). The Operational Creditor maintained that compliance with Section 9(3)(c) is directory and not mandatory.

4. Validity of the Demand Notice and Response Time:
The demand notice was served on 29.07.2019, and the Corporate Debtor replied on 16.08.2019, beyond the prescribed 10-day period under Section 8(2) of IBC. The Corporate Debtor claimed to have received the notice on 10.08.2019 but provided no supporting documents. The tribunal found that the notice was duly delivered on 29.07.2019, and the reply was not within the stipulated time.

5. Examination of WhatsApp Communications and Other Evidence:
The Corporate Debtor relied on WhatsApp communications to argue against the high pricing. However, the tribunal found these communications irrelevant as they were between the Corporate Debtor and a third party, not the Operational Creditor. The tribunal also noted that the Corporate Debtor did not raise any dispute within the required timeframe.

6. Appointment of an Interim Resolution Professional (IRP) and Related Procedural Directions:
The tribunal admitted the application under Section 9(5)(i) of IBC, finding that the Operational Creditor had established non-payment of the operational debt and compliance with procedural requirements. A moratorium was declared, and Mr. Amit Gupta was appointed as the IRP. The Operational Creditor was directed to deposit ?2,00,000/- to meet the immediate expenses of the IRP.

Conclusion:
The tribunal admitted the petition for CIRP against the Corporate Debtor, declared a moratorium, and appointed an IRP, directing compliance with relevant sections of IBC. The Corporate Debtor's objections regarding the excessive pricing and procedural irregularities were dismissed due to non-compliance with the dispute notice period and lack of relevant evidence.