2022 (6) TMI 481 - 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 - Service of demand notice - HELD THAT - The petitioner through has placed a tracking report, whereunder it was stated that the speed post was delivered to the corporate debtor Annexure (A-6). Whether the operational debt was disputed by the corporate debtor? - HELD THAT - It is to be noted that none appeared on behalf of corporate debtor despite repeated service and has been set ex parte vide order dated 20.04.2022. Moreover, petitioner has appended affidavit u/s. 9(3)(b) stating that corporate debtor has not issued any notice or raised any dispute regarding the debt for which the present petition has been filed by the operational creditor. Whether this application is filed within limitation? - HELD THAT - This application was filed on 18.11.2019 vide Diary No. 6401. Whereas the date of default is 01.07.2019, therefore, this Adjudicating Authority finds that this application has been filed within limitation. The application filed in the Form 5 and the same is found to be complete. There is a total unpaid operational debt (in default) of Rs. 9,50,000/- and interest amount of Rs. 17,112.31/-. The operational creditor has been appointed as CEO of the Corporate Debtor. Copy of appointment letter (Annexure A-3) and salary slip issued by the Corporate Debtor for the month of May 2019. Accordingly, the petitioner proved the debt and the default, which is more than Rupees one lakh (prior to the amendment in threshold limit of one crore vide notification No. S.O.1205(E) dated 24.03.2020) by the respondent-corporate debtor. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition for initiation of the CIR Process in the case of the Corporate Debtor is admitted - application admitted - moratorium declared.

Summary

Issues:
1. Validity of demand notice service
2. Dispute of operational debt by corporate debtor
3. Timeliness of the application

Issue 1: Validity of Demand Notice Service
The petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 sought to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, Fairwealth Housing Pvt. Ltd. The petitioner, an Operational Creditor, claimed non-payment of dues. The Adjudicating Authority examined the service of the demand notice in Form 3 dated 09.09.2019. The petitioner provided a tracking report indicating delivery to the corporate debtor. As the corporate debtor did not appear despite service, the Authority proceeded ex parte.

Issue 2: Dispute of Operational Debt
Another crucial issue was whether the operational debt was disputed by the corporate debtor. The corporate debtor's non-appearance led to being set ex parte. The petitioner affirmed that no notice or dispute regarding the debt was raised by the corporate debtor. The lack of response from the corporate debtor and the petitioner's compliance with Section 9(3)(b) strengthened the petitioner's claim.

Issue 3: Timeliness of the Application
The Adjudicating Authority also assessed the timeliness of the application. The petition was filed on 18.11.2019, within the limitation period from the default date of 01.07.2019. This timely filing aligned with the requirements under the Code.

Conclusion
The Adjudicating Authority found the petition complete and in compliance with Section 9(5)(i) of the Code. The petitioner demonstrated the debt and default exceeding the threshold limit. The corporate debtor's failure to pay the claimed amount post-demand notice confirmed the debt's undisputed nature. Consequently, the Authority admitted the petition, initiating CIRP for Fairwealth Housing Pvt. Ltd. Moratorium under Section 14 was imposed, appointing an Interim Resolution Professional. The order detailed various directions for the Interim Resolution Professional's actions, emphasizing compliance with the Code and ethical standards. The petitioner was directed to deposit a specific amount for CIRP expenses, to be reimbursed by the Committee of Creditors. The order's communication to the parties and the Interim Resolution Professional was mandated for immediate implementation.