2022 (5) TMI 1047 - 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 seen from the records that this Tribunal had given sufficient chances to the Corporate Debtor to file its Reply and appear before this Tribunal. However, the Corporate Debtor failed to appear and also did not file its Reply. This act itself shows that the amount is due and payable to the Operational Creditor. It is observed that the Operational Creditor has served and intimated the date of hearings to the Corporate Debtor on several occasions. On the basis of the evidences on record the Operational Creditor has established that he has delivered services to the Corporate Debtor Company for which an amount of Rs. 12,85,64,268/- is due and a default has also occurred. Considering these facts and circumstances, the nature of the Debt is an 'Operational Debt' as defined under section 5 (21) of the Definitions under The Code. There is a Default as defined under section 3 (12) of The Code on the part of the Debtor - On perusal of notice sent under Section 8 (2) of the Code and it came to the notice that the Corporate Debtor has received the same but has not paid the amount of unpaid due. Further, if the Debtor wanted to place on record evidence of 'Dispute' then he could have raised the objection within 10 days as prescribed under section 8 (2) of The Code which had also lapsed now. Hence, admittedly there is no 'Dispute' in respect of the outstanding Debt. The Operational Creditor has successfully demonstrated and proved the debt and default in this case and has also proved that there is absolutely no reason for the Corporate Debtor to hold on to the payment of the invoices. The Operational Creditor has also suggested the name of proposed Interim Resolution Professional along with his consent letter in Form-2 - the Company Petition is liable to be admitted. Petition admitted - moratorium declared.

Summary

Issues:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on default in payment by the Corporate Debtor.

Analysis:
The Company Petition was filed by the Operational Creditor seeking to initiate the CIRP against the Corporate Debtor for defaulting on a payment of Rs. 12,85,64,268 for the supply of Digital Video Recorder. The Operational Creditor alleged that despite repeated reminders and notices, the Corporate Debtor failed to make the payment, leading to the initiation of proceedings under Section 9 of the Code. The Operational Creditor provided evidence of demand notices, invoices, bank statements, and certificates confirming the outstanding debt.

The Corporate Debtor did not appear before the Tribunal despite multiple opportunities and notices, nor did it file a reply denying the liability. The Tribunal noted the absence of any dispute raised by the Corporate Debtor regarding the outstanding debt. The Operational Creditor presented a ledger account and other documents to support the claim, demonstrating the debt and default on the part of the Corporate Debtor.

Based on the evidence presented, the Tribunal found that the Operational Creditor had established the debt and default, fulfilling the legal requirements for admission under Section 9 of the Code. The Tribunal observed that the Corporate Debtor had acknowledged its default due to adverse financial conditions and inability to make payments. Consequently, the Tribunal decided to admit the Company Petition and initiate the CIRP against the Corporate Debtor.

As a result of the admission of the Company Petition, the Tribunal ordered the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor. An Interim Resolution Professional was appointed, and the Operational Creditor was directed to deposit an initial amount towards the CIRP costs. Additionally, the Tribunal imposed restrictions on legal actions against the Corporate Debtor, declared a moratorium period, and specified the management of the Corporate Debtor during the CIRP. The public announcement of the insolvency resolution process was mandated, and necessary communications were directed to the Registrar of Companies for updating records.