2018 (5) TMI 692 - Tri - Insolvency and Bankruptcy

Corporate insolvency resolution process - unpaid operational debt - Held that - Petitioner has filed the confirmation of the respondent for the account of the respondent in the books of the petitioner from 01.04.2015 to 28.03.2017 showing closing debit balance of ₹2,28,89,593/-. This is not disputed by the respondent. As already discussed above, the balance confirmed of ₹2,28,89,593/- is almost the same as the balance shown of the respondent in the petitioner s books for the period 01.04.2017 to 27.07.2017. In these circumstances, the contentions raised with regard to defects in the index of invoices filed along with the application as well as in the revised index of invoice as corrected (Annexure AA-3 of diary No.318 dated 29.01.2018) do not have any significance. Therefore, we conclude that there is no plausible contention of the respondent which requires further investigation and that the dispute is a patently feeble argument or an assertion of fact unsupported by evidence. The dispute is, therefore, spurious, hypothetical and illusory. All the compliances have been made and the application is complete and the petition deserves to be admitted. In view of the above, the instant petition is admitted declaring moratorium

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Jurisdiction of the Tribunal
3. Existence of Operational Debt and Default
4. Dispute regarding Quality of Goods
5. Compliance with Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC)
6. Appointment of Interim Resolution Professional (IRP)
7. Declaration of Moratorium

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petitioner initiated the CIRP against the respondent under Section 9 of the Insolvency and Bankruptcy Code, 2016, read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The petitioner, a commission agent, supplied paddy to the respondent and raised invoices accordingly. The respondent failed to make payments, leading to a demand notice and subsequent reminder, with no repayment or dispute notice from the respondent.

2. Jurisdiction of the Tribunal:
The respondent, M/s Tara Chand Rice Mills Pvt. Ltd., is an exporter, producer, and supplier of rice, incorporated under the Companies Act, 1956, with its registered office in Haryana. The matter falls under the jurisdiction of the National Company Law Tribunal, Chandigarh.

3. Existence of Operational Debt and Default:
The petitioner maintained a running account reflecting a debit balance of ?2,23,89,593/- as of 27.07.2017, which was due and outstanding against the respondent. The petitioner issued a demand notice on 05.09.2017, followed by a reminder on 27.09.2017. The respondent acknowledged the liability but did not make any repayment.

4. Dispute regarding Quality of Goods:
The respondent contended that there was a dispute regarding the quality of the paddy supplied, claiming that a significant portion of the paddy was of inferior quality and contained high moisture, leading to its rejection. The respondent alleged that the petitioner was informed about the quality issues and requested to recall the inferior paddy, which the petitioner allegedly refused. The respondent processed and sold the rejected paddy at a lower value and offered to settle the account, which the petitioner denied.

5. Compliance with Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC):
The Tribunal found that the requirements of Section 9(1) to (3) of the IBC were satisfied. The petition was filed more than 10 days after the delivery of the demand notice. The petitioner filed an affidavit affirming no dispute of unpaid operational debt and provided a certificate from HDFC Bank confirming no payment received from the corporate debtor. The Tribunal noted that the defects in the application were timely rectified, and the documents filed were carefully considered.

6. Appointment of Interim Resolution Professional (IRP):
The petitioner proposed Mr. Sameer Rastogi as the Interim Resolution Professional, filing the required written communication in Form 2. The Tribunal found the form to be in order, with no pending disciplinary proceedings against the proposed IRP.

7. Declaration of Moratorium:
The Tribunal admitted the petition and declared a moratorium prohibiting:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transferring, encumbering, or disposing of any assets or legal rights of the corporate debtor.
- Actions to foreclose, recover, or enforce any security interest.
- Recovery of any property occupied by the corporate debtor.

The supply of essential goods or services to the corporate debtor was directed to continue during the moratorium period. The moratorium would remain in effect until the completion of the CIRP, approval of the resolution plan, or liquidation order.

The matter was listed for further orders on the appointment of the Interim Insolvency Resolution Professional on 21.03.2018, and copies of the order were to be communicated to both parties.

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