2021 (8) TMI 1200 - Tri - Insolvency and Bankruptcy

Maintainability of petition - 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 counsel for the Operational Creditor successfully demonstrated and proved the existence of debt and default. The debt is within limitation. Thus, the Company Petition satisfies all the requirements for admission. Since the Corporate Debtor remained ex-parte even without filing any reply, the claim of the applicant remained unchallenged. The scheme is approved - application allowed.

Issues:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.
2. Appointment of Interim Resolution Professional (IRP).
3. Deposit of initial CIRP cost by the Operational Creditor.
4. Prohibitions on the Corporate Debtor during the CIRP.
5. Continuation of essential goods or services supply.
6. Applicability of Section 14 provisions.
7. Moratorium period.
8. Public announcement of the CIRP.
9. Management vesting in IRP/RP during CIRP.
10. Communication of the order to the Registrar of Companies.

Detailed Analysis:

1. The Company Petition was filed by Ultratech Cement Limited, an Operational Creditor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Schema Enterprises Private Limited, the Corporate Debtor, for defaulting on payment. The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, alleging a default of ?5,37,883.

2. The Operational Creditor, a company registered under the Companies Act, 1956, is engaged in the manufacturing and sale of various construction materials. It supplied materials to the Corporate Debtor as per orders, and upon receipt, issued invoices without dispute.

3. Despite issuing a demand notice to the Corporate Debtor for payment, the Operational Creditor received no response or payment. The Corporate Debtor failed to file a reply or represent itself before the Tribunal, leading to an ex-parte order against them.

4. The Tribunal found the debt to be within the limitation period and satisfied all requirements for admission. Consequently, the Tribunal allowed the Company Petition, initiating the CIRP against Schema Enterprises Pvt. Ltd.

5. As the Operational Creditor did not suggest an Interim Resolution Professional (IRP), the Tribunal appointed Mr. Balaji Shrirang Sagar as the IRP from the list provided by the Insolvency and Bankruptcy Board of India (IBBI).

6. The Operational Creditor was directed to deposit ?2 lakh towards the initial CIRP cost immediately. Various prohibitions were imposed on the Corporate Debtor during the CIRP, including a moratorium on legal actions and asset disposal.

7. The supply of essential goods or services to the Corporate Debtor was mandated to continue uninterrupted during the moratorium period.

8. The provisions of Section 14 were specified not to apply to certain transactions as notified by the Central Government in consultation with financial regulators.

9. The order of moratorium was to be in effect until the completion of the CIRP or until the Tribunal approved a resolution plan or ordered liquidation of the Corporate Debtor.

10. The public announcement of the CIRP process was to be made immediately, and the management of the Corporate Debtor vested in the IRP/RP during the CIRP period. The suspended directors and employees were required to cooperate with the IRP/RP.

11. The Registry was instructed to communicate the order to both parties and the IRP promptly and update the Master Data of the Corporate Debtor with the Registrar of Companies, Mumbai.

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