2017 (6) TMI 1129 - Tri - Insolvency and Bankruptcy

Petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 - Resolution Professional appointment - Held that - This Adjudicating Authority, by this order passed under sub-section (5) of Section 9 of the Code, is admitting this Petition. This Adjudicating Authority is also of the view that it is necessary to make a Reference to the Insolvency and Bankruptcy Board of India established under the Code to recommend the name of an Insolvency Professional, against whom no disciplinary proceedings are pending, to this Adjudicating Authority, within ten (10) days from the date of receipt of the Reference. Section 13 of the Code enjoins upon the Adjudicating Authority to exercise its discretion to pass an order to declare a moratorium for the purposes referred to in Section 14, to cause a public announcement of the initiation of corporate insolvency resolution and call for submission of claims as provided under Section 15 of the Code. Sub-section (2) of Section 13 says that public announcement shall be made immediately after the appointment of Interim Resolution Professional. In the case on hand, simultaneous with the admission order, this Adjudicating Authority is not going to appoint Interim Resolution Professional because the Applicant did not propose the name of Interim Resolution Professional. But, this Adjudicating Authority is going to appoint Interim Resolution Professional after the same is recommended by the Insolvency and Bankruptcy Board of India under Section 16(4) of the Code.

Summary

Issues:
1. Whether the claim is an operational debt or not.
2. Whether there is an occurrence of default.
3. Whether notice as required by sub-section (2) of Section 8 was served on the Corporate Debtor.
4. Whether Corporate Debtor brought to the notice of Operational Creditor any dispute within 10 days of receiving the Demand Notice.
5. Whether the Operational Creditor followed the requirements of Section 9 of the Code read with Rules 5 and 6.

Analysis:
1. The Operational Creditor filed a petition under Section 9 of The Insolvency and Bankruptcy Code, 2016, claiming an outstanding amount for road construction work done for the Corporate Debtor. The total due amount was specified in the Work Agreement, making it an operational debt as defined in the Code.

2. The Operational Creditor provided evidence of completion of work and non-payment by the Corporate Debtor, establishing a default in making payment of the operational debt.

3. The Operational Creditor served a Demand Notice as required by the Code, and the Track Report confirmed the service on the Corporate Debtor, with no response received, fulfilling the notice requirement.

4. The Corporate Debtor did not bring any dispute to the notice of the Operational Creditor within the stipulated period, further supporting the claim for initiation of insolvency proceedings.

5. The Operational Creditor complied with all necessary provisions of the Code and Rules, including issuing notices and providing required documents. The petition was found to be complete, justifying the initiation of the corporate insolvency resolution process.

Conclusion:
The Adjudicating Authority admitted the petition, emphasizing the entitlement of the Operational Creditor to file for insolvency. The Authority directed a reference to the Insolvency and Bankruptcy Board of India for recommending an Insolvency Professional. A moratorium was declared, prohibiting certain actions against the Corporate Debtor, with exceptions for essential services. The moratorium order was to be in force until the completion of the Corporate Insolvency Resolution Process, subject to legal provisions.