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2022 (11) TMI 864 - Tri - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - The first objection raised by the corporate debtor is that Mr. Vismay Chokshi has no authority to file the application. On perusal of the record it is found that the applicant has filed copy of resolution passed by the designated partners of the applicant LLP on 01.11.2019 authorising Mr. Vismay Chokshi , designated partner of the LLP, to act on behalf of the applicant before Court/Tribunal/Forums in legal matters including NCLT to commence CIRP against the corporate debtor. It is evident that the debt is due and payable and default has occurred. The present application is admitted, in terms of section 9 (5) (i) of IBC, 2016. Application admitted - moratorium declared.
Issues:
1. Application filed under Section 9 of Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process. 2. Dispute over outstanding payment between Applicant and Corporate Debtor. 3. Authority of Applicant to file the application. 4. Existence of operational debt and default. 5. Appointment of Interim Resolution Professional. 6. Deposit of funds with Interim Resolution Professional. 7. Imposition of moratorium under Section 14 of the Code. Analysis: 1. The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor for non-payment of outstanding dues. The Applicant, a limited liability partnership, had a Franchise Management Agreement with the Corporate Debtor for managing a badminton team. Despite raising invoices and reminders, the Corporate Debtor failed to make complete payment, leading to the application under Section 9. 2. The dispute over the outstanding payment was central to the case. The Applicant provided evidence of invoices raised and acknowledged by the Corporate Debtor, along with admissions of debt in correspondence. The Corporate Debtor contested the claim, alleging non-performance of work and lack of evidence supporting the amount due. However, the Tribunal found the debt to be due and payable based on the provided documentation and acknowledgments by the Corporate Debtor. 3. The Corporate Debtor challenged the authority of the Applicant to file the application, claiming that the designated partner lacked the necessary authorization. The Tribunal examined the resolution passed by the Applicant's partners authorizing the designated partner to act on behalf of the Applicant in legal matters, including initiating insolvency proceedings. The Corporate Debtor's objection was dismissed based on the provided resolution and acknowledgments of debt. 4. Regarding the existence of operational debt and default, the Tribunal referred to relevant legal provisions and a previous judgment to determine the conditions for admitting an application under Section 9. It was established that the debt was due and payable, and a default had occurred, justifying the admission of the application under Section 9(5)(i) of the Code. 5. The Tribunal appointed an Interim Resolution Professional (IRP) to oversee the resolution process. Mr. Neeraj Kumar Bajaj was appointed as the IRP, subject to certain conditions, and the Applicant was directed to deposit funds with the IRP to cover necessary expenses, as per the regulations. 6. The Applicant was instructed to deposit a specified amount with the IRP within a week to facilitate the IRP's functions during the resolution process. The deposited amount would be subject to adjustment by the Committee of Creditors and refunded to the Applicant accordingly. 7. As a consequence of the application being admitted, a moratorium was imposed on the Corporate Debtor under Section 14 of the Code, prohibiting certain actions and establishing the terms of the moratorium period. The order was to be communicated to the relevant parties and regulatory authorities for compliance and record-keeping purposes.
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