2021 (5) TMI 429 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute, prior to sending to demand notice, or not - HELD THAT - The Corporate Debtor has not refuted the fact that the Operational Creditor has supplied materials as contended in the petition and he has also confirmed the statement of accounts vide e-mail dated 13.03.2018, he has never raised any issues on the quality of the material supplied by the petitioner. However he has replied to the notice sent under Section 8 of IBC 2016 in which he has raised a counter claim over and above the amount claimed by the Operational Creditor. He has not provided any documentary evidence to prove that he has raised a dispute prior to the issue of Section 8 notice by the petitioner. Prima facie the contentions made by the Operational Creditor in the rejoinder appear to be correct as he has provided adequate documentary evidence to prove his allegations. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Existence of Operational Debt
2. Dispute on Debt Amount
3. Fraudulent Invoices and Non-Delivery of Goods
4. Initiation of Corporate Insolvency Resolution Process (CIRP)
5. Imposition of Moratorium
6. Appointment of Interim Resolution Professional (IRP)
7. Deposit for Immediate Expenses

Detailed Analysis:

1. Existence of Operational Debt:
The Petitioner, an Operational Creditor, sought to initiate CIRP against the Respondent, a Corporate Debtor, for defaulting on a payment of ?1,12,99,101/- along with interest of ?33,76,950/-. The Petitioner claimed that the Respondent had confirmed the amount due via email and had not raised any complaints regarding the quality or quantity of goods supplied. The Tribunal noted that the Corporate Debtor had confirmed the statement of accounts and had not disputed the quality of materials supplied.

2. Dispute on Debt Amount:
The Respondent denied owing any debt to the Petitioner, claiming instead that the Petitioner owed ?85,066/- to the Respondent. The Respondent argued that the transactions were part of a mutual running account with reciprocal demands. The Respondent also claimed that invoices amounting to ?1,13,84,168/- were pending and payable by the Petitioner, thus negating the claimed operational debt. The Tribunal found that the Respondent failed to provide documentary evidence to support these claims.

3. Fraudulent Invoices and Non-Delivery of Goods:
The Petitioner countered that the invoices raised by the Respondent were fraudulent, asserting that no goods were delivered against those invoices. The Petitioner provided evidence showing discrepancies in the invoices, such as incorrect company names and addresses, and the use of a JCB crane instead of a truck for delivery. The Tribunal found the Petitioner’s evidence credible and indicative of fraudulent behavior by the Respondent.

4. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Tribunal concluded that the Petitioner had adequately proven the existence of debt and default by the Corporate Debtor. Consequently, the Tribunal initiated CIRP against the Respondent, rejecting the Respondent's contentions.

5. Imposition of Moratorium:
A moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC) was imposed, which included:
- Suspension of all suits or proceedings against the Corporate Debtor.
- Prohibition on transferring or disposing of any assets.
- Suspension of actions to recover or enforce security interests.
- Continuation of essential goods or services to the Corporate Debtor.

6. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Devendra Umrao as the IRP, directing him to take necessary steps as per Sections 15, 17, and 18 of the IBC and to file a report within 30 days.

7. Deposit for Immediate Expenses:
The Applicant was ordered to deposit ?2 lakhs to cover immediate expenses for the IRP, which would be accounted for and reimbursed as CIRP costs.

Conclusion:
The Tribunal found in favor of the Petitioner, initiating CIRP against the Respondent and imposing a moratorium, while appointing an IRP to oversee the process. The Respondent's defenses were rejected due to lack of evidence and indications of fraudulent activity.