2022 (8) TMI 878 - 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 - Time Limitation - HELD THAT - It is settled law that even though the default amount mentioned in the petition is not proved but default of amount proved is covers the threshold amount the petition can be admitted. It is not necessary to prove the exact due amount mentioned in the petition, if the amount proved is satisfy the threshold amount the petition is liable to be admitted. This Tribunal notes that the objections raised by the respondents have been convincingly responded to by the OC. The corporate debtor could not establish that the leave and licence agreement executed on October 5, 2015 and the service agreements dated October 3, 2015 were terminated earlier and they have handed over peaceful possession of the premises to the OC. The corporate debtor vide its e-mail dated August 31, 2020 has rejected the invocation of arbitration clause. Thus, the arbitration proceedings never commenced - The CD has not produced details of any payment made to OC in respect of monthly rent, etc. Thus, in the opinion of this Tribunal operational debt and default is established. In result, going by the facts and circumstances of the case and the material on record, this petition is admitted. The application filed by the operational creditor under section 9 of the Insolvency and Bankruptcy Code, 2016 is hereby admitted for initiating the corporate insolvency resolution process against Coppertun Brewing P. Ltd. - moratorium declared.

Summary

Issues Involved:
1. Limitation period for filing the petition.
2. Pre-existing dispute.
3. Effect of arbitration clause.
4. Dues payable under leave and licence agreement as operational debt.
5. Corporate debtor's possession of the property.
6. Appointment of interim resolution professional.
7. Moratorium and public announcement.

Detailed Analysis:

1. Limitation Period for Filing the Petition:
The petitioner claimed arrears from December 2015 to March 2021. The respondent argued that the petition is barred by limitation as it was filed on September 14, 2021, beyond the three-year period stipulated under Article 137 of the Limitation Act, 1963. The petitioner contended that the default is continuous, invoking Section 22 of the Limitation Act. However, the Tribunal concluded that only dues from September 14, 2018, to March 2021 are within the limitation period, making the petition partially maintainable.

2. Pre-existing Dispute:
The corporate debtor alleged that the agreements were entered into based on false representations, and there was a genuine pre-existing dispute. The Tribunal noted that the operational creditor provided occupancy and fire clearance certificates, and the corporate debtor continued to possess and benefit from the property without payment. Thus, the Tribunal found no valid pre-existing dispute obstructing the petition.

3. Effect of Arbitration Clause:
The corporate debtor claimed that arbitration proceedings were pending. However, the operational creditor’s attempt to invoke arbitration was rejected by the corporate debtor, and no arbitration proceedings commenced. The Tribunal held that the corporate debtor did not mention any pending arbitration in response to the demand notice, thus dismissing this contention.

4. Dues Payable under Leave and Licence Agreement as Operational Debt:
The corporate debtor argued that rent dues do not qualify as operational debt. The Tribunal distinguished this case from precedents, noting that the petitioner claimed arrears for rent, service charges, and maintenance. The Tribunal calculated the service and maintenance charges due from September 2018 to March 2021, which exceeded the threshold amount under Section 4 of the IBC, 2016, thus admitting the petition based on these dues.

5. Corporate Debtor's Possession of the Property:
The corporate debtor initially denied possession during the hearing but had previously admitted it in communications. The Tribunal noted the continued possession and benefit from the property without payment, thereby supporting the operational creditor’s claim.

6. Appointment of Interim Resolution Professional:
The operational creditor did not suggest a name for the interim resolution professional. The Tribunal appointed Mr. Rahul Mishra as the interim resolution professional, ensuring no disciplinary proceedings were pending against him.

7. Moratorium and Public Announcement:
The Tribunal passed a moratorium order prohibiting suits, transferring of assets, and recovery actions against the corporate debtor. The interim resolution professional was directed to make a public announcement and call for claims, ensuring the supply of essential goods or services to the corporate debtor is not interrupted during the moratorium period.

Conclusion:
The Tribunal admitted the application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiating the corporate insolvency resolution process against the corporate debtor. The Tribunal directed the operational creditor to deposit Rs. 2 lakhs with the interim resolution professional for expenses, and the suspended management was instructed to provide all necessary documents and information. The registry was ordered to communicate the decision to relevant parties, and the case was listed for progress reporting on June 13, 2022.