2022 (3) TMI 867 - 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 - Whether the Operational Creditor could prove that the Corporate Debtor has failed to discharge the debt that is due to the Operational Creditor and whether CIRP can be initiated against the Corporate Debtor? - HELD THAT - The account statement filed by the Operational Creditor would show that the amounts paid by the Corporate Debtor are adjusted and the claim is only with regard to the amount remaining after such adjustment. As rightly contended, there is no evidence with regard to the certificate issued by the Auditor and that the auditor has issued the said certificate based on proper evidence and that he is the auditor of the Corporate Debtor at all. Hence, no value can be attached to the said statement made in the counter for the first time. The contention that both the accounts of the Corporate Debtor and M/s. Vaishnavi Impex having been maintained in the same premises, an error occurred does not receive any support and moreover is stands contradicted by the fact that the e-mail given by the Corporate Debtor along with the two separate statements of Corporate Debtor and M/s. Vaishnavi Impex would show that the two accounts were properly maintained without any mincing. The contention of the Operational Creditor that the two companies are managed by the same person is not refuted - It is clear from the material on record that the Corporate Debtor has incurred a debt of ₹ 3,60,11,075/- and defaulted in discharging the same inspite of the demand notice. Hence, the petition is liable to be admitted and as such it is admitted. Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Whether the Operational Creditor could prove that the Corporate Debtor has failed to discharge the debt that is due to the Operational Creditor and whether CIRP can be initiated against the Corporate Debtor.
2. To what result.

Issue-wise Detailed Analysis:

I. Whether the Operational Creditor could prove that the Corporate Debtor has failed to discharge the debt that is due to the Operational Creditor and whether CIRP can be initiated against the Corporate Debtor:

The Tribunal noted that there is no dispute regarding the Operational Creditor supplying goods to the Corporate Debtor, and the Corporate Debtor admitted to making purchases covered by 284 invoices from 14.11.2017 to 30.11.2019. The Operational Creditor provided evidence of communication dated 26.02.2019 and 21.03.2019, which demonstrated separate and clear maintenance of accounts for both the Corporate Debtor and M/s. Vaishnavi Impex. The Corporate Debtor's account showed a closing balance of ?2,38,88,424.50 as on 31.03.2018, corroborated by the ledger account of the Operational Creditor.

The Tribunal observed that the Corporate Debtor did not respond to the demand notice and raised defenses for the first time in its counter. The Operational Creditor's account statement showed adjustments for payments made by the Corporate Debtor, and the remaining claim was for the amount after such adjustments. The Tribunal found no evidence supporting the certificate issued by the alleged auditor, and the Corporate Debtor’s claim of erroneous clubbing of accounts was contradicted by separate statements provided in the email.

Given that both companies are managed by the same person, any collusion between M/s. Vaishnavi Impex and the Operational Creditor was deemed implausible. The Tribunal concluded that the Corporate Debtor incurred a debt of ?3,60,11,075 and defaulted in discharging it despite the demand notice. Therefore, the petition was admitted, and the CIRP was initiated against the Corporate Debtor.

II. To what result:

The Tribunal admitted the Company Petition and ordered the commencement of the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor, to be completed within 180 days. The Tribunal appointed Ms. Narala Varalakshmi as the Interim Resolution Professional (IRP) and directed her to take charge of the Corporate Debtor’s management and proceed with the CIRP as per the relevant sections of the Insolvency and Bankruptcy Code (IBC) and associated rules.

The Tribunal declared a moratorium in respect of the Corporate Debtor under Section 14 of the Code and instructed the Directors, Promoters, or any other persons associated with the management of the Corporate Debtor to extend full cooperation to the IRP. The Registry was directed to communicate the order to the Operational Creditor and the Corporate Debtor and send a copy to the IRP for necessary compliance.