2020 (10) TMI 219 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt- Operational debt or not - existence of debt and dispute or not - HELD THAT - On perusal of the record it is also found that the instant petition filed by the applicant is well within limitation and there is no denial of the operational debt and/or any preexisting dispute regarding the operational debt from the corporate debtor - In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt to the Applicant. On perusal of the records it is also found that the corporate debtor has never raised any dispute on issuance of notice u/s 8 of the I B Code nor have ever raised any dispute prior to the issuance of notice - the respondent has defaulted the debt and has admitted the operational debt. On the basis of material available on record it is evident that the corporate debtor has committed default in payment of operational debt and, therefore, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - application admitted - moratorium declared.

Summary

Issues:
- Petition under Section 9 of The Insolvency and Bankruptcy Code, 2016
- Default in payment of operational debt by the corporate debtor
- Adjudication of the operational debt claim
- Declaration of moratorium and appointment of Interim Resolution Professional

Analysis:
1. The petitioner, being the director of the operational creditor, filed a petition under Section 9 of The Insolvency and Bankruptcy Code, 2016, claiming an outstanding amount due from the respondent corporate debtor. The operational creditor provided detailed information regarding the debt, including the amount, interest rate, and period of supply of goods.

2. The record indicated that despite multiple opportunities, the respondent did not appear, leading to an ex parte hearing. The adjudicating authority found the petition to be within the limitation period and noted the absence of any denial or preexisting dispute regarding the operational debt from the corporate debtor.

3. The authority examined the evidence provided by the operational creditor, including demand notices, debt calculations, affidavits, and financial statements, to establish the existence of the debt and default by the corporate debtor in payment. The respondent did not raise any dispute before or after receiving the notice under Section 8 of the I & B Code.

4. Referring to a relevant legal precedent, the authority outlined the conditions to be met for admitting such applications, including the presence of operational debt exceeding a specified amount, evidence of due payment, and absence of disputes or pending legal actions. The authority concluded that the operational debt was due, and the applicant fulfilled the requirements of the Insolvency & Bankruptcy Code.

5. Subsequently, the authority directed the initiation of the corporate insolvency resolution process, declared a moratorium, and appointed an Interim Resolution Professional to oversee the proceedings. The moratorium was imposed to prevent legal actions against the corporate debtor, asset transfers, or enforcement of security interests during the resolution process.

6. The order specified the duration and effects of the moratorium, ensuring the continuity of essential services to the corporate debtor. Additionally, the authority appointed a specific Interim Resolution Professional due to the operational creditor's failure to propose a name. The order was communicated to all relevant parties, including the Registrar of Companies, to ensure compliance and facilitate the resolution process without hindrance.