2022 (11) TMI 928 - Tri - Insolvency and Bankruptcy

Maintainability 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 Corporate Debtor did not choose to file any reply, contesting the above Company Petition. The Corporate Debtor has not complied with the order of this Bench, dated 18.07.2022, in which the Corporate Debtor was directed to submit a copy of reply, before next date and argue the matter, failing which the argument of the Corporate Debtor would be treated as heard. The Corporate Debtor did not furnish any reply and did not appear before this Bench on 23.09.2022. The Corporate Debtor was set exparte. This Bench feels that the Petitioner has successfully demonstrated the existence of debt and default committed by the Corporate Debtor in this case. Since the Corporate Debtor did not file any reply, the claim of Operational Creditor remained unchallenged. The above Company Petition being filed on 04.12.2019 is well within limitation. Thus, Company Petition satisfies all legal requirements for admission. Petition admitted - moratorium declared.

Issues Involved:
Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code based on operational debt of Rs. 47,96,754.

Detailed Analysis:

1. Legal Basis for Filing Company Petition:
The Company Petition was filed by an Operational Creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor under Section 9 of the Insolvency and Bankruptcy Code. The Petitioner provided various documents, including bank certificates, purchase orders, outstanding invoices, delivery challans, and debit notes, to demonstrate the existence of debt amounting to Rs. 47,96,754.

2. Background of the Case:
The Petitioner, engaged in manufacturing cotton-related products, entered into transactions with the Respondent, a textile business, for the supply of cotton yarn. The Respondent failed to make payments for the goods supplied, leading to the accumulation of outstanding dues. Despite reminders and a demand notice, the Respondent did not clear the dues, prompting the Petitioner to file the Company Petition.

3. Failure of Respondent to Respond:
The Corporate Debtor did not file any reply or contest the Company Petition. The Bench noted that the Respondent did not comply with previous orders to submit a reply or appear before the Tribunal. As a result, the Corporate Debtor was set ex-parte, and the claims of the Operational Creditor remained unchallenged.

4. Admittance of Company Petition:
After considering the submissions and evidence presented by the Operational Creditor, the Bench found that the Petitioner had successfully demonstrated the existence of debt and default by the Corporate Debtor. Since the Respondent did not contest the claims, the Company Petition was deemed well within the legal requirements for admission.

5. Tribunal's Order and Directions:
The Tribunal admitted the Company Petition and ordered the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor. Additionally, the Tribunal appointed an Insolvency Professional from the list provided by the Insolvency and Bankruptcy Board of India (IBBI) to act as the Interim Resolution Professional. Various directions were issued regarding the deposit of initial CIRP costs, imposition of a moratorium, continuation of essential services, and management of the Corporate Debtor during the CIRP period.

6. Conclusion:
The Tribunal's decision to admit the Company Petition and initiate CIRP against the Corporate Debtor was based on the failure of the Respondent to respond or clear the outstanding dues. The legal requirements were met, leading to the appointment of an Insolvency Professional and the imposition of necessary measures to facilitate the resolution process.

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