2021 (12) TMI 964 - 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 - whether the demand notice in Form No.3 was properly served? - HELD THAT - The demand notice was sent by the post at the registered address of the Corporate Debtor. The original postal receipts are attached as Annexure A-14 of the petition. The tracking report which is attached as Annexure A-15 of the petition shows that the demand notice was duly served to the corporate debtor. Whether the operational debt was disputed by the corporate debtor? - HELD THAT - There is no such evidence placed on record by the corporate debtor that there is some pre-existing dispute regarding the revised rent with respect to the lease deed in his reply. Also the corporate debtor has not approached any legal forum for redressal of his grievance with respect to unpaid operational debt - there is a total unpaid operational debt (in default) of ₹ 3,28,01,724/- (including ₹ 74,52,807/- as interest @ 18% per annum). Based on documents on record, it is held that the demand notice in Form No.3 was properly delivered by the petitioner and no pre-existing dispute is proved. It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. The petitioner states that from the facts, that it is clear that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is more than ₹ 1 Crore by the respondent-corporate debtor. In the present petition all the requirements have been satisfied. It is seen that the petition preferred by petitioner is complete in all respect. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner - petition admitted - moratorium declared.

Issues Involved:
1. Proper service of demand notice.
2. Existence of operational debt and any pre-existing dispute.
3. Compliance with Section 9 of the Insolvency and Bankruptcy Code.
4. Appointment of Interim Resolution Professional (IRP).
5. Declaration and implementation of moratorium.

Issue-Wise Detailed Analysis:

1. Proper Service of Demand Notice:
The Tribunal examined whether the demand notice in Form No.3 was properly served. The petitioner sent the demand notice by post to the registered address of the Corporate Debtor. The original postal receipts and tracking report confirmed that the demand notice was duly served, satisfying the requirement of proper service.

2. Existence of Operational Debt and Any Pre-Existing Dispute:
The petitioner claimed an unpaid operational debt of ?3,28,01,724/- (including ?74,52,807/- as interest @ 18% per annum). The Tribunal found no evidence of any pre-existing dispute regarding the revised rent in the Corporate Debtor's reply. The Corporate Debtor did not approach any legal forum for redressal of grievances related to the unpaid operational debt, indicating the absence of any dispute.

3. Compliance with Section 9 of the Insolvency and Bankruptcy Code:
The Tribunal assessed the petition under Section 9 of the Code, which requires determining:
- Whether there is an "operational debt" exceeding ?1 lakh.
- Whether the documentary evidence shows that the debt is due and payable and has not been paid.
- Whether there is any existence of a dispute or record of pending suit or arbitration before the receipt of the demand notice.

The Tribunal found that all these requirements were satisfied. The petition was complete in all respects, and the material on record showed that the Corporate Debtor defaulted in payment of the claimed operational debt even after a demand was made.

4. Appointment of Interim Resolution Professional (IRP):
The petitioner proposed Mr. Anil Arora as the IRP, and his consent was furnished in Form 2. The Tribunal checked his credentials and found no adverse findings. Consequently, Mr. Anil Arora was appointed as the IRP with specific directions, including taking control and custody of the Corporate Debtor's assets, making a public announcement, and constituting a Committee of Creditors.

5. Declaration and Implementation of Moratorium:
The Tribunal declared a moratorium in terms of Section 14(1) of the Code, which includes:
- Suspension of suits or proceedings against the Corporate Debtor.
- Prohibition on transferring or disposing of the Corporate Debtor's assets.
- Prevention of actions to foreclose or recover any security interest.
- Continuation of supply of essential goods or services to the Corporate Debtor.

The moratorium will remain effective until the completion of the Corporate Insolvency Resolution Process (CIRP) or until a resolution plan is approved or liquidation is ordered.

Conclusion:
The Tribunal admitted the petition for initiating the CIRP against the Corporate Debtor, M/s SRS Entertainment India Limited, and directed the implementation of a moratorium. Mr. Anil Arora was appointed as the IRP, and specific instructions were given to manage the CIRP process. The petitioner was directed to deposit ?2,00,000/- with the IRP to meet immediate CIRP expenses, which will be reimbursed by the Committee of Creditors. Copies of the order were to be communicated to the parties involved and the IRP.

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