2022 (4) TMI 567 - 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 due payable to operational creditors, or not - Service of demand notice - HELD THAT - It is not in dispute that the Corporate Debtor had received Demand Notice dated 04.04.2019 (Annexure-6). It is also not in dispute that the Corporate Debtor replied the same (Annexure-8). The Corporate Debtor in para-5 of its reply to demand notice stated that final outstanding amount payable to the Operational Creditor as on 12.04.2019 is ₹ 17,38,397/- . This notice reply does not speak about any pre-existing dispute relating to deficiency of service as has been raised as a defence in additional affidavit in reply by the Corporate Debtor. Such defence being after thought cannot be considered - Moreover, there is absolutely no material evidence produced by the Corporate Debtor on record to substantiate its defence relating to deficiency of service, etc. - the defence is rejected. Existence of debt and due payable to operational creditors, or not - HELD THAT - In reply to the Demand Notice, the Corporate Debtor admitted that on 12.04.2019 an amount of ₹ 17,38,397/- was due and payable by the Corporate Debtor to the Operational Creditor towards the transport charges. In para-8 of the additional affidavit in reply, the Corporate Debtor contended that it has offered the Operational Creditor a sum of ₹ 12,38,397/- towards full and final settlement. If according to the Corporate Debtor, nothing was due and payable by it to the Operational Creditor then for what it has offered above amount towards settlement? The Corporate Debtor has no reply. It appears from evidence on record that there may be dispute about the actual amount due and payable by the Corporate Debtor to the Operational Creditor but one fact is proved from the evidence on record that the Corporate Debtor has to pay a sum of Rupees more than One Lakh (as per threshold limit of ₹ 1,00,000/- under Section-4 of the IBC, prior to the Notification dated 24.03.2020) to the Operational Creditor and the Corporate Debtor has committed default in paying the sum in spite of receipt of Demand Notice. This Application is defect free. Application admitted - moratorium declared.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on default in payment of operational debt.

Analysis:
1. The application was filed by the Operational Creditor against the Corporate Debtor for defaulting on an operational debt of ?40,33,500/-. The Operational Creditor provided transportation services to the Corporate Debtor between September 2018 and February 2019, raising invoices for the services provided. Despite repeated demands and a demand notice under Section 8 of the IBC, the Corporate Debtor failed to clear the outstanding amount, leading to the application for initiating the Corporate Insolvency Resolution Process.

2. The Corporate Debtor raised defenses claiming that the Operational Creditor failed to comply with work order terms, had already paid a significant sum, and disputed the outstanding amount. However, the Operational Creditor presented evidence, including balance confirmation letters and admission of dues by the Corporate Debtor, refuting these defenses.

3. The Tribunal examined the evidence and defenses raised by the Corporate Debtor. It noted that the Corporate Debtor's defenses lacked merit as they failed to provide substantial evidence to support their claims. The Corporate Debtor's admission of dues in various documents contradicted its defense that nothing was payable to the Operational Creditor.

4. The Tribunal emphasized that the existence of a pre-existing dispute does not negate the obligation to pay outstanding debts exceeding the threshold limit under the IBC. As the Corporate Debtor failed to clear the operational debt despite receiving a demand notice, the Tribunal found the application to be defect-free and admitted the Corporate Debtor to the Corporate Insolvency Resolution Process.

5. Consequently, the Tribunal issued orders admitting the Corporate Debtor to the CIRP, declaring a moratorium, appointing an Insolvency Resolution Professional, and directing the IRP to manage the operations of the Corporate Debtor during the resolution process. The Operational Creditor was instructed to pay an advance for the smooth conduct of the CIRP, and the Registry was directed to communicate the order to all relevant parties.

6. The Tribunal allowed the application, emphasizing the need for the IRP to file progress reports to facilitate the resolution process effectively. The detailed order outlined the obligations and procedures to be followed during the Corporate Insolvency Resolution Process, ensuring compliance with the Insolvency and Bankruptcy Code, 2016.