2021 (6) TMI 112 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - service of demand notice - time limitation - HELD THAT - On perusal of the records it is found that reply has not been filed by the respondent despite giving number of opportunities. The instant petition filed on 09.12.2019 was notified for the first time on 01.01.2020. On perusal of the record it is also found that the demand notice issued by the applicant under section 8 of the I B Code on 24.09.2019 has been served upon the corporate debtor - 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 denial of the operational debt or any pre-existing 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'. The 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 - it is evident that 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:
1. Application under Section 9 of The Insolvency and Bankruptcy Code, 2016 for operational debt.
2. Default in payment of operational debt by the corporate debtor.
3. Appointment of Interim Resolution Professional.
4. Declaration of moratorium under Section 13 of the Code.

Analysis:

Issue 1: Application under Section 9 of The Insolvency and Bankruptcy Code, 2016 for operational debt
The operational creditor, a partnership firm engaged in the manufacture and supply of goods, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming that the respondent owed a total sum towards the supply of goods. The applicant provided various documents to support the claim, including unpaid tax invoices, ledger entries, GST returns, and a demand notice issued under Section 8 of the Code. The Tribunal found that the applicant's petition was well within the limitation period, and there was no denial of the operational debt by the corporate debtor. The Tribunal concluded that the operational debt was due and payable, meeting the requirements of the Insolvency and Bankruptcy Code.

Issue 2: Default in payment of operational debt by the corporate debtor
The Tribunal noted that the respondent had not filed a reply despite multiple opportunities and that the demand notice had been served upon the corporate debtor. The documents presented by the operational creditor established the existence of the debt and the default in payment by the corporate debtor. Referring to a previous Supreme Court judgment, the Tribunal determined that the operational debt was due, no dispute had been raised by the respondent, and the amount claimed was payable by the corporate debtor. Consequently, the Tribunal found that the corporate debtor had committed a default in payment of operational debt, warranting the initiation of the insolvency resolution process.

Issue 3: Appointment of Interim Resolution Professional
The Tribunal directed the appointment of an Interim Resolution Professional to oversee the insolvency resolution process. Mr. Nandish Sunilbhai Vin was appointed as the Interim Resolution Professional to act in accordance with Section 13(1)(c) of the Code. The Tribunal emphasized the importance of adhering to the provisions of the Code and ensuring the proper management of the insolvency resolution process.

Issue 4: Declaration of moratorium under Section 13 of the Code
In line with Section 13 of the Code, the Tribunal declared a moratorium to prohibit various actions against the corporate debtor, including the institution of suits, transfer of assets, and recovery of property. The moratorium was to remain in effect until the completion of the corporate insolvency resolution process or any subsequent orders passed by the Tribunal. Additionally, the Tribunal specified that essential services to the corporate debtor should not be terminated during the moratorium period, except for transactions notified by the Central Government in consultation with financial sector regulators.

In conclusion, the Tribunal admitted the petition, declared a moratorium, appointed an Interim Resolution Professional, and directed communication of the order to relevant parties, ensuring compliance with the provisions of the Insolvency and Bankruptcy Code for the effective resolution of the insolvency process.