2022 (10) TMI 382 - 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 - threshold limit involved in the appeal - HELD THAT - The Applicant has placed on record the invoices which are due to be cleared by the Corporate Debtor. Further, the Applicant had issued a demand notice, as mandated by Section 8 of the Code, 2016. Such notice had been received and replied to, by the Corporate Debtor. A certificate issued by the HDFC Bank, Jalna Branch, certifying that the account of the Applicant held in the said bank has not received the sum of Rs. 97,65,235 or any part thereof, from the Corporate Debtor, between 08.06.2017 to 10.05.2019, is also attached. Further, the Applicant has complied with all the requirements as stipulated under the provisions of the Code, 2016, for the purpose of initiating the CIRP against the Corporate Debtor. In these circumstances, it is satisfying that the Applicant has proved its case by placing evidence with regard to the debt owed by the Corporate Debtor and its default. Threshold limit of amount involved in the appeal - HELD THAT - It may be of some significance to note here that the total amount of debt that is due in the instant Application is below the current threshold amount of Rupees One Crore, which is mandatory for the initiation of the CIRP - The instant Application was filed in the year 2019, when the threshold amount for the initiation of CIRP was only Rupees One Lakh. It has been judicially settled that the increase in the threshold amount will have a prospective effect and not a retrospective one. The National Company Law Tribunal, New Delhi Bench in its judgment in BLS Polymers Ltd. v. RMS Power Solutions (P) Ltd. 2021 (7) TMI 1331 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI held that the notification, dated 24.3.2020, numbered as CG-DL-E-24032020-218898, which enhanced the threshold limit from Rupees One Lakh to Rupees One Crore to initiate insolvency proceedings under the Code, 2016 is only applicable in respect of defaults that occurred on or after the date of notification, i.e., 24.3.2020 and not prior to that - In the case at hand, as per the invoices, the amounts were due and payable prior to the issuance of the said notification, dated 24.03.2020. Hence, the notification increasing the threshold amount has no application here. The instant petition is, hereby, admitted and this Adjudicating Authority orders the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within the timelines stipulated in the Code, 2016, reckoning from the date of this order - Application admitted - moratorium declared.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.

Analysis:
1. Debt and Default: The Applicant, an Operational Creditor, filed an Application under Section 9 of the Code seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor for non-payment of dues amounting to Rs. 97,65,235. The Applicant had a trade relationship with the Corporate Debtor for the supply of goods, and despite multiple demands for payment, the Corporate Debtor failed to settle the outstanding invoices, leading to the debt remaining undischarged.

2. Ex-Parte Order: The Corporate Debtor was set ex-parte due to its failure to appear before the Tribunal despite multiple notices and substituted service through publication. The Tribunal examined the documents on record, including invoices, demand notice, and a certificate from the bank confirming non-receipt of the due amount by the Applicant. The Tribunal found that the Applicant had fulfilled all requirements under the Code for initiating CIRP, establishing the debt owed by the Corporate Debtor and its default.

3. Threshold Amount Clarification: The Tribunal addressed the issue of the threshold amount for initiating CIRP, clarifying that the increase from Rs. 1 lakh to Rs. 1 crore would apply prospectively. As the debt in this case was due before the notification enhancing the threshold limit, the higher limit did not affect the present Application.

4. Admission of Petition: Considering the evidence presented by the Applicant, the Tribunal admitted the petition and ordered the commencement of the Corporate Insolvency Resolution Process, emphasizing completion within the timelines specified in the Code.

5. Appointment of Interim Resolution Professional (IRP): The Tribunal appointed an IRP from the panel of the Insolvency and Bankruptcy Board of India, directing the IRP to file consent and take charge of the Corporate Debtor's management immediately. The IRP was also tasked with making a public announcement and calling for claim submissions as per the Code.

6. Moratorium and Directions: A moratorium was declared from the date of the order until the completion of the CIRP, prohibiting various actions against the Corporate Debtor. Essential supplies were exempted from termination during the moratorium. The Applicant was directed to pay an advance fee to the IRP, and compliance with Code provisions was emphasized.

7. Operational Procedures: The IRP was instructed to comply with specific sections of the Code, and the directors and associated persons of the Corporate Debtor were required to cooperate with the IRP. The Registry was directed to communicate the order to relevant parties and authorities for necessary actions and updates.

In conclusion, the Tribunal admitted the Application, initiated the Corporate Insolvency Resolution Process, appointed an IRP, declared a moratorium, and issued various directions for the resolution of the debt owed by the Corporate Debtor.