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2022 (5) TMI 1268 - 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 - HELD THAT - It is noted that as per the arrangement between the operational creditor and the corporate debtor dated 20.03.2015, operational creditor has provided mobile telecom services to the customers of corporate debtor while such customers travel in U.K. For this purpose, operational creditor provided mobile sim cards to the corporate debtor which the corporate debtor sold to its customers in India. It is also noted that certain financial targets were to be achieved over a two-year period of the contract. This application complies with the basic requirements of Section 8/9 of IBC, 2016 and rules and regulations made thereunder. The crux of the matter is that whether there exists a dispute between the parties prior to delivery of notice of demand U/s. 8 of IBC. If it is so, the other question which arises for our consideration is whether undisputed amount of outstanding liability is more than the threshold limit as prescribed U/s. 4 of IBC, 2016. As far as first aspect is concerned, there have been a number of communications between the operational creditor and corporate debtor which make it apparent that there are certain strong differences between the two. Thus, it becomes imperative to find out what is the undisputed amount of liability. There are no hesitation in holding that at two stages, definite liability to pay has been acknowledged and accepted by the corporate debtor. The said liability in both the situations is more than the threshold limit. Hence, having regard to various judicial decisions rendered by the Hon'ble NCLAT that in case of dispute, if the undisputed liability is more than the threshold limit, the application could be admitted. Petition admitted - moratorium declared.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency & Bankruptcy Code, 2016. 2. Existence of dispute over the debt claimed by the Operational Creditor. 3. Compliance with basic requirements of Section 8/9 of IBC, 2016. 4. Acknowledgment of debt by the Corporate Debtor. 5. Appointment of Interim Resolution Professional (IRP). 6. Declaration of moratorium under Section 14 of IBC, 2016. Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of IBC, 2016: The application was filed by the Operational Creditor, M/s. EE Limited, under Section 9 of the Insolvency & Bankruptcy Code, 2016, for the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Falcon Business Resources Pvt. Ltd. The Operational Creditor provided telecom services to the Corporate Debtor's customers traveling to the UK under an EE Framework Reseller Agreement dated 20.03.2015. 2. Existence of dispute over the debt claimed by the Operational Creditor: The Corporate Debtor contended that the debt was disputed and could not be adjudicated in a summary proceeding under the IBC. They argued that the Operational Creditor had breached the contract by inflating invoices and providing incomplete credits. The Corporate Debtor also claimed damages for business loss due to the Operational Creditor's actions, including the disconnection of SIM cards without notice. 3. Compliance with basic requirements of Section 8/9 of IBC, 2016: The Tribunal noted that the application complied with the basic requirements of Section 8/9 of IBC, 2016, and the rules and regulations made thereunder. The primary issue was whether there existed a dispute prior to the delivery of the notice of demand under Section 8 of IBC and whether the undisputed amount of liability exceeded the threshold limit prescribed under Section 4 of IBC, 2016. 4. Acknowledgment of debt by the Corporate Debtor: The Tribunal examined the emails exchanged between the parties. In an email dated 31.07.2017, the Corporate Debtor acknowledged a liability of £23,544.13. Subsequently, in an email dated 18.09.2017, the Corporate Debtor agreed to a full and final settlement of GBP 10,000, despite mentioning it was without prejudice to their legal rights and claims for damages. The Tribunal held that the use of "without any prejudice" did not negate the acknowledgment of debt. The Tribunal concluded that the Corporate Debtor had acknowledged and accepted the liability at two stages, and the acknowledged liability exceeded the threshold limit. 5. Appointment of Interim Resolution Professional (IRP): The Tribunal appointed Mr. Nitish Kumar Chugh as the Interim Resolution Professional (IRP) from the list provided by the Insolvency and Bankruptcy Board of India (IBBI). The IRP was directed to take charge of the Corporate Debtor's management immediately and to make a public announcement as prescribed under Section 15 of the IBC, 2016. 6. Declaration of moratorium under Section 14 of IBC, 2016: The Tribunal declared a moratorium effective from the date of the order until the completion of the CIRP. The moratorium prohibited the institution or continuation of suits or proceedings against the Corporate Debtor, transferring or disposing of assets, foreclosure or enforcement of security interests, and recovery of property by owners or lessors. The supply of essential goods or services to the Corporate Debtor was not to be terminated, suspended, or interrupted during the moratorium period. The Tribunal directed the Operational Creditor to pay Rs. 2,00,000 to the IRP for compliance with the provisions of the IBC, 2016. The Registry was instructed to serve a copy of the order on the Registrar of Companies, Delhi & Haryana, to update the status of the Corporate Debtor on the Ministry of Corporate Affairs website and file a compliance report. Conclusion: The application for initiation of CIRP was admitted, and the Tribunal ordered the appointment of an IRP and declared a moratorium. The Tribunal held that the Corporate Debtor had acknowledged the debt, and the undisputed liability exceeded the threshold limit, thus justifying the admission of the application under Section 9 of the IBC, 2016.
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