2020 (10) TMI 393 - 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 - On 04.03.2020, copies of the email exchanged between the parties were handed over across the bar. A perusal of this correspondence reveals that on 02.03.2020, learned counsel for the employee- Operational Creditor addressed a communication to the Corporate Debtor, drawing attention to this Adjudicating Authority s order dated 10.02.2020, and stating that there has not been a single call from the side of the Corporate Debtor towards settlement. The Corporate Debtor replied vide email of the same date, i.e., 02.03.2020, to the effect that we have reviewed the matter internally but will not be able to give any payment commitment before next eighteen months due to financial constraints. This email has remained uncontroverted. Therefore, there is a liability that is clearly admitted by the Corporate Debtor. 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 at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Application admitted - moratorium declared.

Issues:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC).
2. Default in payment by the Corporate Debtor to the Operational Creditor (Employee).
3. Admission of the petition and appointment of Interim Resolution Professional.

Issue 1: Initiation of CIRP under section 9 of IBC
The Company Petition was filed by an Operational Creditor, an individual (employee), seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, a private company limited by shares. The Operational Creditor alleged non-payment of a substantial amount by the Corporate Debtor, leading to the filing of the petition before the Adjudicating Authority.

Issue 2: Default in payment by the Corporate Debtor
The Operational Creditor, an employee of the Corporate Debtor, claimed that salary dues from October 2018 to June 2019 were unpaid. Despite multiple communications and a Demand Notice, the Corporate Debtor acknowledged the outstanding debt but cited financial constraints for non-payment. The Adjudicating Authority found the debt due and payable to be &8377;50,90,629.00, establishing the default exceeding the minimum amount stipulated under the IBC.

Issue 3: Admission of the petition and appointment of Interim Resolution Professional
The Adjudicating Authority, after considering the submissions and correspondence between the parties, found the application by the Operational Creditor to be complete and in compliance with the law. The Corporate Debtor's admission of liability and failure to commit to payment within a reasonable timeframe led to the admission of the petition. Consequently, the Authority admitted the petition, ordered the initiation of CIRP against the Corporate Debtor, and appointed an Interim Resolution Professional to oversee the resolution process.

In conclusion, the judgment by the National Company Law Tribunal, Mumbai Bench, involved the initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016, due to default in payment by the Corporate Debtor to the Operational Creditor, an employee. The Adjudicating Authority admitted the petition, imposed a moratorium, appointed an Interim Resolution Professional, and issued necessary directions for the resolution process, emphasizing compliance with legal requirements and protection of the rights of the parties involved.

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