2022 (7) TMI 879 - 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 - whether the demand notice in Form 3 dated 06.11.2018 was properly served? - HELD THAT - The demand notice was duly served upon respondent as per tracking report mentioned at Page 143-144 of the main petition. Therefore, it can be said that the demand notice has been duly served - Moreover, the petition is signed by one of the partners which has been stated on affidavit filed vide Diary No. 00321/3 dated 04.05.2022, which satisfies the condition that demand notice and the petition was duly signed by the Authorized Signatory. Thus, the objection raised by the Ld. counsel for the respondent on this point is invalid. Whether the operational debt was disputed by the corporate debtor? - HELD THAT - The Learned counsel for respondent has failed to point out as to if there was some pre-existing dispute regarding supplied material being sub-standard in the quality then it was pending in any court of law or before any other authority. Thus, it can be safely inferred from affidavit (page 19 of petition) under Section 9(3) (b) of I B Code, 2016 that there is no pre-existing dispute in relation to the debt claimed as per Part IV of Form 5. Whether this petition is filed within limitation? - HELD THAT - A demand notice dated 06.11.2018 in Form 3 attached as Annexure 8 was duly served on the corporate debtor through registered post. It is observed that neither any reply from the corporate debtor has been filed in lieu of the above stated demand notice nor any payment has been made. Therefore, the period of limitation would begin from the date of default i.e. 17.05.2018. This petition was filed on 07.01.2019 vide Diary No. 56. Therefore, this Adjudicating Authority finds that this petition was filed within limitation. It is seen that the petition preferred by the petitioner is complete in all respects. 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 - Also, 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. Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Proper service of demand notice.
2. Existence of a pre-existing dispute.
3. Timeliness of the petition within the limitation period.
4. Completeness of the petition.
5. Satisfaction of conditions under Section 9 of the Insolvency and Bankruptcy Code (IBC).
6. Appointment of Interim Resolution Professional (IRP).
7. Declaration of moratorium.

Issue-wise Detailed Analysis:

1. Proper Service of Demand Notice:
The tribunal examined whether the demand notice dated 06.11.2018 was properly served. It was found that the demand notice was duly served upon the respondent as per the tracking report. The respondent's submissions were contradictory, claiming both non-receipt and defectiveness of the notice. The tribunal concluded that the demand notice was properly served and signed by an authorized partner of the petitioner, making the respondent's objections invalid.

2. Existence of a Pre-existing Dispute:
The tribunal considered whether there was a pre-existing dispute regarding the operational debt. The petitioner claimed no reply was received to the demand notice. The respondent failed to show any pending dispute in any court or authority regarding the alleged sub-standard quality of supplied materials. The tribunal inferred from the affidavit under Section 9(3)(b) of the IBC that there was no pre-existing dispute related to the debt claimed.

3. Timeliness of the Petition within Limitation:
The tribunal assessed if the petition was filed within the limitation period. The demand notice dated 06.11.2018 was served, and no reply or payment was made by the corporate debtor. Thus, the limitation period began from the date of default, 17.05.2018. The petition filed on 07.01.2019 was deemed within the limitation period.

4. Completeness of the Petition:
The tribunal reviewed the contents of the petition filed in Form 5 and found it complete. The unpaid operational debt amounted to Rs. 74,02,917.00, inclusive of 24% interest per annum. The operational creditor provided necessary documents, including invoices, ledger accounts, and statutory notice, proving the debt and default.

5. Satisfaction of Conditions under Section 9 of the IBC:
The tribunal confirmed that the conditions under Section 9 of the IBC were satisfied. The operational creditor proved the debt and default, which exceeded the threshold limit of one lakh rupees (prior to the amendment increasing the threshold to one crore rupees). The petition met all requirements, leading to its admission for initiating the Corporate Insolvency Resolution Process (CIRP).

6. Appointment of Interim Resolution Professional (IRP):
The tribunal appointed Mr. Aditya Kumar as the IRP, confirming his credentials and absence of any adverse records. The tribunal directed the IRP to undertake responsibilities as per the IBC, including taking control of the corporate debtor's assets, making a public announcement, and constituting a Committee of Creditors.

7. Declaration of Moratorium:
The tribunal declared a moratorium effective from the date of the order until the completion of the CIRP or approval of a resolution plan. The moratorium included suspension of suits, transfer of assets, enforcement of security interests, and recovery of property. Essential goods and services to the corporate debtor were to remain uninterrupted during the moratorium period.

Conclusion:
The tribunal admitted the petition for initiating the CIRP against the corporate debtor, M/s. Kaytx Industries Private Limited, and appointed Mr. Aditya Kumar as the IRP. A moratorium was declared, and the petitioner was directed to deposit Rs. 1,00,000 with the IRP to cover immediate CIRP expenses.