2021 (5) TMI 434 - 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 or not - HELD THAT - On perusal of the record it is also found that the instant petition filed by the applicant is well within limitation and there is no preexisting dispute regarding the operational debt from the side of the corporate debtor - In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt due and payable to the Applicant - The documents produced by the operational creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'operational debt'. This adjudicating authority is of the considered view that operational debt is due to the Applicant and it fulfilled the requirement of I B Code. No dispute has been raised by the respondent at any point of time. That, Applicant is an Operational Creditor within the meaning of Section 5 sub-section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force. Thus, the corporate debtor has committed default in payment of operational debt and, therefore, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - petition admitted - moratorium declared.

Summary

Issues:
Admission of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on default and debt due and payable.

Analysis:
The case involved a petition filed by an operational creditor against a corporate debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016. The operational creditor supplied goods to the corporate debtor on credit, resulting in an outstanding amount of ?3,18,27,826 as of 01.04.2019. The operational creditor issued a demand notice to the corporate debtor, who admitted the debt but expressed inability to pay. The Adjudicating Authority considered the evidence presented and found that the operational debt was due and payable, with no preexisting dispute from the corporate debtor's side. The Authority noted that the applicant fulfilled the requirements of the Code, and the corporate debtor defaulted in payment.

The Adjudicating Authority referred to the case law of Mobilox Innovative Private Limited vs. Kirusa Software Private Limited to determine the conditions for admitting the application under Section 9. It was established that the operational debt exceeded ?1.00 lac, the debt was due and payable, and there was no dispute or pending suit regarding the debt. The Authority concluded that the operational debt was due to the applicant and met the Code's requirements. The respondent did not raise any dispute, and the debt was not barred by limitation or any other law.

The Authority exercised its discretion under Section 13 of the Code to declare a moratorium, initiating the Corporate Insolvency Resolution Process. The moratorium prohibited various actions against the corporate debtor, including legal proceedings and asset transfers. The Authority directed the Interim Resolution Professional to make a public announcement and call for claim submissions. The moratorium would remain in effect until the completion of the insolvency resolution process or liquidation approval.

The operational creditor proposed an interim resolution professional, and the petition was admitted. The Authority communicated the order to relevant parties and directed the Registrar of Companies not to initiate proceedings to strike off the respondent company's name. This decision aimed to protect stakeholders' interests during the insolvency resolution process and asset realization.