2021 (7) TMI 355 - 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 - affidavit under section 9 (3) (b) of IBC 2016 filed or not - Service of demand notice - HELD THAT - It appears that the objection raised by the corporate debtor that the operational creditor has not filed the affidavit under section 9 (3) (b) of IBC 2016 is a technical ground that is curable. The said affidavit is not mandatory unless affects the case or causes prejudice to the corporate debtor. Moreover, the reply made by the corporate debtor to the demand notice has been considered in the present application on merit, hence, such a plea of the corporate debtor has got no relevance. On perusal of the affidavit in support of the instant application, it reveals that the contents of said affidavits are clear and consist of contents required for verifying the present application. No format as such has been prescribed by the aforesaid rules for verification affidavit. More so, said affidavit does not affect the merit of the present application. Issuance of demand notice - HELD THAT - The contention of the operational creditor in respect to the demand notice issued by the advocate on behalf of the operational creditor is without any authorization is not valid. This issue has already been settled by the supreme court in the matter of MACQUARIE BANK LIMITED VERSUS SHILPI CABLE TECHNOLOGIES LTD. 2017 (12) TMI 850 - SUPREME COURT that the demand notice issued by the advocate is valid even without authorization - The invoice has been raised by the operational creditor on 09.03.2018 after statement between the operational creditor and the corporate debtor vide communicated dated 16.02.2018 issued by the operational creditor and the same was acknowledged by the director of the corporate debtor. Thus, this application has been filed within the limitation. The amount claimed as well as acknowledged by the corporate debtor also meets the threshold limit as prescribed under section 4 of IBC 2016. The plea as regards to pre-existing dispute raised by the corporate debtor has not been substantiated by bringing any cogent evidence on record. The present application is defect-free and complies with all the relevant provisions of the IB Code. The operational creditor has not proposed the name of Resolution Professionals, the same is not mandatory terms - Application admitted - moratorium declared.

Summary

Issues:
Application under Section 9 of IBC 2016 for Corporate Insolvency Resolution Process - Default amount and interest claimed - Dispute over outstanding debt - Validity of demand notice - Compliance with procedural requirements - Appointment of Resolution Professional.

Analysis:
1. The operational creditor filed an application under Section 9 of the Insolvency & Bankruptcy Code, 2016 against the corporate debtor for the default amount and interest. The creditor supplied goods as per a purchase order, and after a settlement agreement, raised invoices for the outstanding amount. The debtor acknowledged the debt but raised a dispute over services provided, leading to a demand notice under section 8 of IBC 2016. The debtor contended that the application lacked necessary affidavits and procedural compliance.

2. The Tribunal noted that the absence of the affidavit under section 9(3) (b) of IBC 2016 was a curable technicality and did not prejudice the debtor. The affidavit in support of the application complied with the required contents, and the absence of a specific format did not affect the merit of the case. The demand notice issued by the operational creditor was considered valid, as per the Supreme Court ruling, and the pre-existing dispute raised by the debtor lacked substantial evidence.

3. The Tribunal found the application defect-free and compliant with IB Code provisions. The moratorium was declared to prohibit actions against the debtor. The appointment of a Resolution Professional was made as the operational creditor did not recommend one. The IRP was directed to perform specified functions and ensure cooperation from all involved parties. Public announcement for CIRP initiation and continuity of supplies to the debtor were mandated during the moratorium period.

4. The IRP was instructed to preserve the debtor's assets and manage operations as a going concern. The operational creditor was directed to advance funds to the IRP for CIRP conduct. The Registry was tasked with communicating the order to relevant parties and uploading it on the website. The application for Corporate Insolvency Resolution Process was allowed by the Tribunal, ensuring compliance with legal procedures and safeguarding the interests of all parties involved.