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2022 (7) TMI 145 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - time limitation - HELD THAT - On perusal of the documents of the Operational Creditor, it is clear from the electronic mails dated 2nd November, 2016 and 24th November, 2016 and from the minute of the meeting dated 16th November, 2016 held between the Operational Creditor and Corporate Debtor that the Corporate Debtor has admitted/acknowledged its liability and it is clear that there are unequivocal admissions of amounts due and payable by it to the Operational Creditor. Thus, by virtue of the unconditional withdrawal of the suit by the Corporate Debtor, there cannot be any justification to refuse to pay the admitted amount to the operational creditor. The Corporate Debtor has failed to make payment of the confirmed and undisputed outstanding dues/debt of Rs.35,74,679/- only to the Operational Creditor and as evident from the facts and circumstances, the Corporate Debtor is not in a position to clear its legal debt and committed default. The claim is not in any way barred by limitation as will appear, inter alia, from the invoices and repeated acknowledgements of liability by the Corporate Debtor, which is undisputed - the Operational Creditor has a valid claim against the Corporate Debtor, which the Corporate Debtor has failed to discharge, by committing default which is proved on record. The Corporate Debtor has failed to prove any pre-existing dispute or any payment having been made to the Operational Creditor, within 10 days of receipt of the Statutory Notice under Section 8 of the Code. The application filed by the Operational Creditor under Section 9 of the Insolvency Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, is hereby admitted - Moratorium declared.
Issues Involved:
1. Existence of Operational Debt and Default 2. Barred by Limitation 3. Dispute over Payment Contingency 4. Admission of Liability 5. Privity of Contract 6. Moratorium and Appointment of IRP Detailed Analysis: Existence of Operational Debt and Default: The Operational Creditor filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the corporate insolvency resolution process against the Corporate Debtor. The Corporate Debtor had placed a purchase order for hose assemblies, and the Operational Creditor supplied the goods and raised invoices totaling Rs. 35,74,679/-. Despite multiple acknowledgments of liability by the Corporate Debtor, the amount remained unpaid since 06/09/2016. Barred by Limitation: The Corporate Debtor argued that the claim was barred by limitation. However, the Operational Creditor contended that the petition was filed within the three-year limitation period as per Article 137 of the Limitation Act, 1963. The petition was filed on 03/09/2019, within three years from the due date of 06/09/2016. Dispute over Payment Contingency: The Corporate Debtor claimed that payment to the Operational Creditor was contingent upon receiving payment from ArcelorMittal. However, the Operational Creditor argued that there was no such condition in the purchase order. The terms specified that 100% payment would be made against the Letter of Credit within 60 days from the bill of lading or airway bill date, without any contingency on ArcelorMittal's payment. Admission of Liability: The Corporate Debtor had admitted its liability through various correspondences, including emails dated 2nd and 24th November 2016 and the minutes of a meeting held on 16th November 2016. The Corporate Debtor's reply to the demand notice dated 15/07/2019 also acknowledged the debt but linked payment to the receipt from ArcelorMittal. Privity of Contract: The Operational Creditor was not involved with ArcelorMittal, and all transactions were directly between the Operational Creditor and the Corporate Debtor. The suit filed by the Corporate Debtor against ArcelorMittal was withdrawn unconditionally, eliminating any justification for withholding payment to the Operational Creditor. Moratorium and Appointment of IRP: The tribunal admitted the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, and declared a moratorium in accordance with Sections 13 and 15 of the I & B Code, 2016. The moratorium prohibits the institution or continuation of suits, transferring assets, and recovery actions against the Corporate Debtor. Mr. Milan Sachindra Nath Chatterjee was appointed as the Interim Resolution Professional (IRP) to convene a Committee of Creditors and evolve a resolution plan. Conclusion: The tribunal found that the Operational Creditor had a valid claim against the Corporate Debtor, who failed to discharge its debt. The defenses raised by the Corporate Debtor were deemed untenable and without merit. The application for initiating the Corporate Insolvency Resolution Process was admitted, and a moratorium was declared. The IRP was appointed to manage the resolution process, and the Operational Creditor was directed to deposit Rs. 1,00,000/- with the IRP for preliminary expenses. The matter was listed for a progress report on 12/08/2022.
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