2021 (4) TMI 1070 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt - demand Notice u/s 8 of IBC has never been received by the Corporate Debtor - HELD THAT - The Demand Notice U/s. 8 dated 05.04.2019 is recorded and annexed as Annexure A- 4. It was sent by speed post and in rejoinder the Operational Creditor has also produced on record the postal track report as Annexure-1 (Page No. 18 of the rejoinder) which shows that the Demand Notice was sent at correct Registered address of the Corporate Debtor and it has been delivered to the Corporate Debtor - the Demand Notice was served to the Corporate Debtor but Corporate Debtor did not reply to the notice either by pointing pre-existing dispute or the fact that it has made payment of the amount of the debt as claimed by the Operational Creditor. It is the defence of the Corporate Debtor that in fact some amount is receivable from them but we hold that defence of set off or counter-claim is not available under the IBC, 2016. We also make it clear that if Corporate Debtor had any defence, he certainly would have replied the Demand Notice within 10 days of its receipt - the Operational Creditor established that there is an Operational Debt more than ₹ 1,00,000/- (as per Sec. 4 of IBC, 2016) due and payable by the Corporate Debtor and Corporate Debtor committed the default in paying the same in spite of receipt of notice U/s. 8 of IBC. This Application is defect free - Adjudicating Authority is further satisfied that the Operational Creditor has proved its case by placing evidence that default has occurred for which the Corporate Debtor was liable to pay - application admitted - moratorium declared.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under section 9 of IBC, 2016 based on default in payment of Operational Debt.

Analysis:
The application was filed by an Operational Creditor against a Corporate Debtor for defaulting on an operational debt of USD 212,936.07. The debt was related to repair and maintenance services provided by the Operational Creditor to the Corporate Debtor, including the supply of aircraft parts. The Operational Creditor claimed that despite sending a notice under section 8 of IBC, the Corporate Debtor failed to clear the debt or raise any pre-existing dispute. The Corporate Debtor disputed the receipt of the demand notice and claimed that the Operational Creditor owed them USD 80,130.

The Tribunal examined the evidence and found that the demand notice was indeed served to the Corporate Debtor, as evidenced by the postal track report. The Corporate Debtor's defense of set off or counter-claim was deemed invalid under IBC, and their failure to respond to the notice within 10 days was considered fatal to their defense. The Tribunal rejected the Corporate Debtor's defense as an afterthought and upheld the Operational Creditor's claim of an operational debt exceeding INR 1,00,000.

The Tribunal appointed an Insolvency Resolution Professional (IRP) and declared a moratorium on legal actions against the Corporate Debtor. Essential goods or services supply to the Corporate Debtor was protected during the moratorium period. The IRP was instructed to comply with specific sections of the IBC, and the Directors and Promoters of the Corporate Debtor were directed to cooperate with the IRP. The Registry was tasked with communicating the order to all relevant parties and updating the Corporate Debtor's status with the Ministry of Corporate Affairs.

In conclusion, the Tribunal admitted the Company Application for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, appointing Mr. Santosh Bhatia as the IRP and implementing necessary measures to manage the insolvency proceedings effectively.