2021 (6) TMI 356 - 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 - Time Limitation - HELD THAT - The default, on the part of the Corporate Debtor is proved from the documents filed and the submissions made by the Learned Counsel by the Operational Creditor. Further, it is also pertinent to note that the default arising in the present Application is much prior to the advent of the Covid-19 pandemic and hence the Corporate Debtor cannot seek shelter also under Section 10A of IBC, 2016. Under the said circumstances, this Tribunal is left with no other option other than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor. Time Limitation - HELD THAT - It is evident from the perusal of the Invoices as filed by the Petitioner/Operational Creditor in relation to the Corporate Debtor which discloses that the invoices have been raised commencing from 31.03.2016 to 09.12.2017 and the account being maintained on a running account basis, the present Application under Section 9 of IBC, 2016 has been filed by the Operational Creditor before this Tribunal on 26.09.2019 and as such it falls well within the period of limitation. The Petition as filed by the Operational Creditor is required to be admitted under Section 9(5) of the IBC, 2016 - moratorium declared.

Issues Involved:

1. Admissibility of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Existence of a default and dispute regarding the quality of goods supplied.
3. Compliance with procedural requirements and pecuniary jurisdiction.
4. Application of moratorium under Section 14 of the IBC, 2016.
5. Appointment of Interim Resolution Professional (IRP).

Issue-Wise Detailed Analysis:

1. Admissibility of the Application under Section 9 of the Insolvency & Bankruptcy Code, 2016:

The application was filed by the Operational Creditor, M/s. Precifine Die and Casting, under Section 9 of the IBC, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. UCAL Auto Private Limited. The tribunal found the application to be in order, with all necessary particulars provided, including details of the Operational Creditor and Corporate Debtor. The Operational Creditor had not proposed any Interim Resolution Professional (IRP), leaving it to the tribunal's discretion.

2. Existence of a Default and Dispute Regarding the Quality of Goods Supplied:

The Operational Creditor claimed an operational debt of ?1,18,77,303.29 along with interest. The Corporate Debtor contended that the debt was disputed due to the alleged inferior quality of goods supplied and claimed that payments had already been made for non-defective goods. However, the tribunal noted that the Corporate Debtor failed to provide any documentary evidence to substantiate these claims or any correspondence indicating disputes over the quality of goods before the issuance of the demand notice. The tribunal found the Corporate Debtor’s defense to be spurious and unsupported by evidence.

3. Compliance with Procedural Requirements and Pecuniary Jurisdiction:

The tribunal confirmed that the application was filed within the period of limitation, with invoices dated from 31.03.2016 to 09.12.2017, and the application filed on 26.09.2019. The tribunal also addressed the pecuniary jurisdiction, noting that although the threshold limit was raised to ?1 crore on 24.03.2020, the default in this case arose before that date, and the claim exceeded ?1 lakh, thus falling within the tribunal's jurisdiction.

4. Application of Moratorium under Section 14 of the IBC, 2016:

Upon admitting the application, the tribunal imposed a moratorium as per Section 14(1) of the IBC, 2016, which includes the prohibition of:
a. Institution or continuation of suits or proceedings against the Corporate Debtor.
b. Transferring, encumbering, or disposing of any assets of the Corporate Debtor.
c. Actions to foreclose, recover, or enforce any security interest.
d. Recovery of any property by an owner or lessor.

The tribunal clarified that licenses, permits, registrations, and similar grants would not be suspended or terminated due to insolvency, provided there is no default in payment of current dues during the moratorium period.

5. Appointment of Interim Resolution Professional (IRP):

Since the Operational Creditor did not propose an IRP, the tribunal appointed Mr. Narayanan Seshasayee as the IRP from the list provided by the Insolvency and Bankruptcy Board of India (IBBI), subject to the condition that no disciplinary proceedings were pending against him. The tribunal directed the Operational Creditor to pay ?2,00,000 to the IRP for meeting the expenses of performing his functions.

Conclusion:

The tribunal admitted the application under Section 9(5) of the IBC, 2016, initiating the CIRP against the Corporate Debtor and imposed a moratorium. The tribunal directed the registry to communicate the order to the concerned parties and the IBBI, and to forward a copy to the appointed IRP and the Registrar of Companies.

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