2022 (2) TMI 562 - 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 - HELD THAT - It is the matter of record that vide order dated 13.03.2020 the counsel for the Operational Creditor submitted that the parties have entered into settlement and a part payment of ₹ 2,00,000/- (Rupees two lakh only) has been received by the Operational Creditor. However, on 18.02.2021, after the settlement was entered into, the Corporate Debtor has failed to adhere to and comply with the settlement of payment and the remaining amount has not yet been paid - From the records it is apparent that the goods were supplied and delivered and a debt towards it is due and payable in favour of the Operational Creditor. The petition made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of the minimum amount of one lakh rupees as stipulated under section 4(1) of the Code at the relevant time. There is no defence from the side of the Corporate Debtor. Therefore, the default stands established and there is no reason to deny the admission of the petition - this Adjudicating Authority admits this petition and orders initiation of CIRP against the Corporate Debtor. Petition allowed - moratorium declared.

Issues:
1. Initiation of Corporate Insolvency Resolution Process under section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Default in payment by the Corporate Debtor.
3. Jurisdiction of the Adjudicating Authority.
4. Appointment of Interim Resolution Professional (IRP).
5. Moratorium under section 14 of the Insolvency and Bankruptcy Code.
6. Public announcement of the Corporate Insolvency Resolution Process.
7. Management of the Corporate Debtor during the CIRP.

Issue 1: Initiation of Corporate Insolvency Resolution Process under section 9 of the Insolvency and Bankruptcy Code, 2016:
The Company Petition was filed by the Operational Creditor seeking to initiate Corporate Insolvency Resolution Process against the Corporate Debtor due to non-payment of a significant sum along with interest. The petition detailed the outstanding amount, the history of transactions, and the failure of the Corporate Debtor to settle the dues. The Adjudicating Authority found the petition to be complete and in compliance with the law, establishing the default in payment by the Corporate Debtor, leading to the admission of the petition and initiation of CIRP.

Issue 2: Default in payment by the Corporate Debtor:
The Corporate Debtor failed to make payment for the supplied goods, leading to a substantial outstanding amount. Despite some partial payments and a temporary settlement, the Corporate Debtor ultimately failed to comply with the agreed payment terms. The Adjudicating Authority noted the default in payment, as evidenced by the records and submissions made by the Operational Creditor, which led to the admission of the petition for initiating CIRP.

Issue 3: Jurisdiction of the Adjudicating Authority:
The Corporate Debtor, a private limited company incorporated under the Companies Act, 2013, fell within the jurisdiction of the Adjudicating Authority located in Uttar Pradesh. The Authority confirmed its jurisdiction to handle the petition based on the registration details and the location of the Corporate Debtor's registered office within the State of Uttar Pradesh.

Issue 4: Appointment of Interim Resolution Professional (IRP):
The Operational Creditor proposed a specific individual as the Interim Resolution Professional (IRP) for the Corporate Debtor. However, the proposed IRP lacked a valid Authorisation for Assignment (AFA) as required by the regulations. Consequently, the Adjudicating Authority directed the appointment of another insolvency professional from the panel provided by the IBBI, ensuring compliance with the regulatory requirements.

Issue 5: Moratorium under section 14 of the Insolvency and Bankruptcy Code:
Upon admission of the petition and initiation of CIRP, the Adjudicating Authority declared a moratorium under section 14 of the IBC. The moratorium would remain in effect from the date of the order until the completion of the CIRP or until specific events such as approval of a resolution plan or liquidation of the Corporate Debtor, as per the provisions of the Code.

Issue 6: Public announcement of the Corporate Insolvency Resolution Process:
Following the admission of the petition, the Adjudicating Authority ordered the immediate public announcement of the Corporate Insolvency Resolution Process in accordance with the relevant sections of the Code and the regulations. This step ensures transparency and compliance with the procedural requirements of the insolvency proceedings.

Issue 7: Management of the Corporate Debtor during the CIRP:
During the Corporate Insolvency Resolution Process, the management of the Corporate Debtor would vest in the appointed IRP, who would carry out the functions as prescribed by the Code. The officers and managers of the Corporate Debtor were directed to cooperate with the IRP, providing necessary documents and information. The IRP was mandated to submit periodical reports on the progress of the CIRP to the Adjudicating Authority, ensuring oversight and compliance with the resolution process.

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