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2021 (1) TMI 149 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor committed default in making payment of its dues - existence of debt or dispute or not - period from 1st January, 2019 to 31st March, 2019 - HELD THAT - There is no reply from the side of the Corporate Debtor despite of intimation of the date of hearing by the Petitioner, the Corporate Debtor failed to appear, despite service of notice, as such the bench decided to hear the matter ex-parte and posted the matter for final hearing. The Petitioner also produced the Ledger Account of the Corporate Debtor for the period 01.04.2019 to 24.10.2019 wherein it was shown that a sum of ₹ 49,41,663/- is due from the Corporate Debtor. The assurance of the Corporate Debtor to pay the said outstanding dues amounts to admission of its liability. The Corporate Debtor were in breach of terms and conditions of contract in not complying with the 90 days notice period as required under the Subscription form and also defaulted the payment terms and therefore there is a clear liability of payment of monies dues under the several invoices raised by the petitioner. The corporate Debtor having availed the services, failed to pay the monies due under the invoices. This bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgement, decree or other in any court of law; transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor.
Issues:
1. Petition seeking Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor for default in payment. 2. Alleged breach of contract terms by the Corporate Debtor. 3. Failure of Corporate Debtor to appear for the hearing. 4. Admission of liability by Corporate Debtor. 5. Decision on the admission of the Petition and declaration of Moratorium. Analysis: Issue 1: Petition seeking Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor for default in payment. The Petitioner, engaged in providing financial data services, filed a petition seeking to initiate the CIRP against the Corporate Debtor for defaulting on a payment of ?52,30,839, comprising principal and interest. The Petition was filed under Sections 8 and 9 of the Insolvency & Bankruptcy Code, supported by relevant rules. Issue 2: Alleged breach of contract terms by the Corporate Debtor. The Petitioner detailed the contractual agreement where the Corporate Debtor subscribed to news feed services with payment terms. Despite invoices and reminders, the Corporate Debtor failed to pay the outstanding amounts, breaching the contract terms. The Petitioner also highlighted assurances made by a representative of the Corporate Debtor regarding pending payments, which were not fulfilled. Issue 3: Failure of Corporate Debtor to appear for the hearing. Despite multiple notices and communication, the Corporate Debtor did not appear for the scheduled hearing, leading the bench to conduct an ex-parte hearing. The Petitioner provided evidence of outstanding dues and the breach of contract terms by the Corporate Debtor, further strengthening the case for CIRP initiation. Issue 4: Admission of liability by Corporate Debtor. The Corporate Debtor's acknowledgment of the outstanding dues and failure to dispute the demand notice indicated an admission of liability. The bench found the Corporate Debtor in clear breach of contract terms and non-compliance with payment obligations, justifying the admission of the Petition for CIRP. Issue 5: Decision on the admission of the Petition and declaration of Moratorium. After thorough consideration of the facts presented, the bench admitted the Petition, initiating the CIRP against the Corporate Debtor. A moratorium was declared, prohibiting legal actions against the Corporate Debtor, ensuring continuity of essential services, and appointing an Interim Resolution Professional. The order specified the moratorium period and outlined necessary steps for the resolution process. This detailed analysis of the judgment highlights the legal grounds, contractual breaches, non-appearance of the Corporate Debtor, admission of liability, and the consequential decision for initiating CIRP and declaring a moratorium.
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