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2021 (12) TMI 1153 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Sub-standard goods or not - HELD THAT - The Corporate Debtor categorically stated that the actual amount payable by the Respondent will be ₹ 3,28,800/-. According to the Corporate Debtor, the Oven supplied by the Operational Creditor was defective. It had burst in April, 2019. The fact that the goods were of sub-standard quality was already informed to the Operational Creditor. However, it is difficult for us to accept this defence. It is not in dispute that as per invoice dated 10.08.2018 (page No. 40-45), the goods were supplied. According to the Corporate Debtor, it got burst in April, 2019 i.e. almost seven months after its installation at the premises of the Corporate Debtor. There is every possibility that the Oven got burst due to want of proper maintenance by the Corporate Debtor. It is not in dispute that the Corporate Debtor did not reply demand notice under Section 8 of IBC. In earlier notice reply dated 22.05.2019, the Corporate Debtor admitted the debt. Not only that, as per the Corporate Debtor's own statement in reply, it has made payment of ₹ 9,91,200/- and it is ready to pay balance sum of ₹ 3,28,800/-. In such situation the Corporate Debtor's defence that goods received by it was sub-standard cannot be accepted. The Corporate Debtor had admitted that operational debt of ₹ 3,28,800/- is yet to be paid by it to the Operational Creditor. It had received demand notice but did not make the payment. This application is defect free - application admitted - moratorium declared.
Issues:
Application under Section 9 of IBC for Corporate Insolvency Resolution Process due to default in payment of operational debt. Analysis: The application was filed by an Operational Creditor against a Corporate Debtor for defaulting on a debt of ?10,54,179. The debt arose from the sale of Gas Fired Trolley Oven, with part of the amount remaining unpaid due to alleged defects in the goods supplied. Despite a legal notice and demand notice, the Corporate Debtor failed to pay the outstanding amount, leading to the initiation of the insolvency resolution process. Legal Arguments: The Operational Creditor argued that the Corporate Debtor had admitted the debt in a reply and failed to respond to the demand notice under Section 8 of IBC, indicating a lack of a pre-existing dispute. On the other hand, the Corporate Debtor contended that there was a dispute regarding the quality of the goods sold, claiming the goods were sub-standard. However, the Corporate Debtor's defense was deemed weak as it did not return the goods or make the outstanding payment. Judgment: The Tribunal found that the Corporate Debtor had admitted to owing ?3,28,800 to the Operational Creditor, failed to respond to the demand notice, and did not return the goods in question. As a result, the application for Corporate Insolvency Resolution Process was allowed. The moratorium under Section 14 of IBC was declared, appointing an Insolvency Resolution Professional to oversee the resolution process. The IRP was directed to manage the operations of the Corporate Debtor and ensure the continuation of supplies during the moratorium period. Additionally, the Operational Creditor was instructed to pay an advance to the IRP for the smooth conduct of the resolution process. The judgment was communicated to all relevant parties for compliance.
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