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2022 (11) TMI 54 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - It may be seen that the Corporate Debtor has sought for time and more time on the pretext that negotiation between the parties for settlement are going on, which dissuade the Corporate Debtor from filing any reply and during the hearing the Learned Counsel, Mr. V.V. Sivakumar appeared for the Corporate Debtor had admitted their liability of payment due to the Operational Creditor. Thus, the Operational Creditor has proved that there is an existence of 'Operational Debt' and the default of such operational debt which is payable by the Corporate Debtor to the Operational Creditor. From the list of invoices filed which has been annexed in the application, it is evident that the claim as raised by the Operational Creditor is within the prescribed period of limitation of 3 years and in relation to the Corporate Debtor the registered office of which is situated within the State of Tamilnadu, amenable to its territorial jurisdiction, this Authority has no hesitation in admitting this Petition and initiating the Corporate Insolvency Resolution Process (CIRP) as against the Corporate Debtor - it is also pertinent to note that the default arising in the present Application is much prior to the advent of the Covid-19 pandemic and hence the Corporate Debtor also cannot seek shelter under Section 10A of IBC, 2016. Petition admitted - moratorium declared.
Issues Involved:
1. Application for initiation of Corporate Insolvency Resolution Process (CIRP). 2. Existence and default of operational debt. 3. Territorial jurisdiction and limitation period. 4. Impact of COVID-19 on the default. 5. Appointment of Interim Resolution Professional (IRP). 6. Implementation of moratorium. 7. Duties and responsibilities of the IRP. Issue-wise Detailed Analysis: 1. Application for initiation of Corporate Insolvency Resolution Process (CIRP): The application was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) against the Corporate Debtor, seeking initiation of CIRP, declaration of moratorium, and appointment of an Interim Resolution Professional (IRP). 2. Existence and default of operational debt: The Operational Creditor claimed an outstanding debt of Rs. 5,68,37,100.51 along with interest at 18% per annum from 24.01.2020 until 01.11.2021. The debt arose from the supply of 927,140 metric tonnes of steel coils and sheets, which the Corporate Debtor accepted and used in their business. Despite promises, the Corporate Debtor failed to make substantial payments after 01.09.2020. The Tribunal found that the Operational Creditor successfully proved the existence of the operational debt and the default by the Corporate Debtor. 3. Territorial jurisdiction and limitation period: The Tribunal confirmed that the claim was within the prescribed limitation period of three years. The registered office of the Corporate Debtor is situated within the State of Tamil Nadu, making the Tribunal's territorial jurisdiction applicable. 4. Impact of COVID-19 on the default: The Tribunal noted that the default occurred before the COVID-19 pandemic, thus the Corporate Debtor could not seek protection under Section 10A of the IBC, 2016, which provides relief for defaults occurring during the pandemic. 5. Appointment of Interim Resolution Professional (IRP): As the Operational Creditor did not propose an IRP, the Tribunal appointed Ms. Rongali Sridevi as the IRP from the list furnished by the Insolvency and Bankruptcy Board of India (IBBI), subject to no pending disciplinary proceedings and necessary disclosures. 6. Implementation of moratorium: Upon admitting the application, the Tribunal declared a moratorium under Section 14(1) of the IBC, 2016, which includes: a. Suspension of suits or continuation of pending suits or proceedings. b. Prohibition on transferring, encumbering, or disposing of any assets. c. Prevention of actions to foreclose or enforce security interests. d. Protection of property in possession of the Corporate Debtor. 7. Duties and responsibilities of the IRP: The IRP is directed to take charge of the Corporate Debtor's management immediately, make a public announcement within three days, and call for claims from creditors. The IRP must also comply with Sections 13(2), 15, 17, and 18 of the IBC, 2016, and the Directors of the Corporate Debtor are required to extend cooperation as per Section 19. The IRP will conduct the CIRP as per the IBBI regulations and file the first progress report within 45 days. Conclusion: The Tribunal admitted the application under Section 9(5) of the IBC, 2016, initiated the CIRP against the Corporate Debtor, declared the moratorium, and appointed Ms. Rongali Sridevi as the IRP. The Operational Creditor was directed to pay Rs. 2,00,000 to the IRP for expenses, and the IRP was instructed to file progress reports and take necessary steps as per the IBC regulations. The petition stands admitted, and the CIRP process is to be communicated to relevant authorities.
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