2020 (10) TMI 681 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - inability of Corporate Debtor to liquidate its operational debt - existence of debt and dispute or not - time limitation - HELD THAT - Admittedly no reply was sent to the Demand Notice and hence no dispute was raised under Section 8 sub Section 2 of the Code and the amount claimed by the Operational Creditor has not been paid by the Corporate Debtor and we have also noticed that the application is complete. Further, the amount claimed by the Operational Creditor is more than ₹ 1 lakh which is the minimum threshold limit fixed under IBC, 2016 and the present petition being filed on 02.08.2019 is within limitation, being within three years from the date of the cause of action. Therefore, under such circumstances, there are no option but to reject the contention of the Corporate Debtor that the application is not maintainable and it is liable to be rejected, the Operational Creditor has succeeded to establish this fact that he raised the last invoice on 20.09.2016, the Corporate Debtor has defaulted in paying the dues and the present application is within limitation as it was filed on 02.08.2019. This Adjudicating Authority is inclined to admit this petition and initiate CIRP of the Respondent - Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Validity of the operational debt claimed by the Operational Creditor.
3. Compliance with Section 8 of the Insolvency & Bankruptcy Code, 2016.
4. Existence of a dispute regarding the claimed debt.
5. Appointment of Interim Resolution Professional (IRP).
6. Imposition of moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016.
7. Directions for the Operational Creditor to deposit funds for IRP expenses.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed under Section 9 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of CIRP against the Corporate Debtor due to its inability to liquidate its operational debt. The Operational Creditor had issued a Demand Notice on 06.06.2019 under Section 8 of the Code, which was duly served to the Corporate Debtor but received no reply.

2. Validity of the Operational Debt:
The Operational Creditor claimed an outstanding balance of ?18,02,043/- towards the principal amount and interest of ?8,52,243/-. The Corporate Debtor contended that only certain invoices were acknowledged and stamped, amounting to ?30,372/-, and claimed that the rest were invalid as they were neither stamped nor signed. The Corporate Debtor also mentioned having paid ?6,00,000/- through a demand draft towards all pending liabilities, including interest.

3. Compliance with Section 8 of the Insolvency & Bankruptcy Code:
The tribunal referred to Section 8 of the Code, which mandates the Corporate Debtor to respond to the Demand Notice within ten days, either disputing the debt or providing proof of payment. The Corporate Debtor failed to comply with this requirement, as no response was sent to the Demand Notice, and no pre-existing dispute was raised.

4. Existence of a Dispute:
The tribunal cited the Supreme Court's decision in "Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited," which clarifies that the existence of a dispute must be pre-existing before the receipt of the Demand Notice. Since the Corporate Debtor did not raise any dispute within the stipulated time, the tribunal found no valid dispute existed regarding the claimed debt.

5. Appointment of Interim Resolution Professional (IRP):
The Operational Creditor proposed the name of Mr. Manohar Lal Vij as the IRP. The tribunal confirmed his appointment, noting that his consent and necessary details were on record and that there were no disciplinary proceedings pending against him.

6. Imposition of Moratorium:
The tribunal imposed a moratorium under Section 14 of the Code, which includes:
- Suspension of institution or continuation of suits or proceedings against the Corporate Debtor.
- Prohibition on transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Suspension of actions to foreclose or enforce security interests.
- Protection of essential goods or services to the Corporate Debtor from termination or suspension during the moratorium period.

7. Directions for Operational Creditor to Deposit Funds:
The tribunal directed the Operational Creditor to deposit ?2 lakhs to cover the immediate expenses of the IRP, which would be accountable and reimbursed by the Committee of Creditors (CoC) as CIR costs.

Conclusion:
The tribunal admitted the petition, initiated CIRP against the Corporate Debtor, and imposed a moratorium. The tribunal also appointed Mr. Manohar Lal Vij as the IRP and directed the Operational Creditor to deposit funds for IRP expenses. The case was renotified for the IRP's report.