2018 (11) TMI 407 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - outstanding dues - Held that - Nothing shows that the amount claimed by the Operational Creditor is not due as alleged by the Corporate Debtor in the reply affidavit. In the absence of the Corporate Debtor, as considered the reply affidavit in detail and satisfied that none of the objections are sustainable under law. Come to a conclusion that the outstanding amount as claimed by the Operational Creditor is due and despite issuance of demand notice, the corporate Debtor failed to discharge its debts and therefore, an application of this nature is liable to be admitted provided the Operational Creditor succeeds in proving that the requirement to be meted out as per Section 9(5)(a) to (e) is satisfied. The Applicant has produced affidavit under Section 9(3)(b) of the Code to the effect that there is no notice given by the corporate Debtor relating to a dispute of unpaid operational debt. Instead of producing a copy of the certificate from the financial Institutions in compliance of Section 9(3)(c) Code, the Operational Creditor has produced the copy of statement of accounts. The Operational Creditor succeeds in proving that demand notice has been issued to the Corporate Debtor along with the copy of invoices and the demand notice has been delivered on the Corporate Debtor. Section 9(5)(e) of the Code not meted out because the operational Creditor has not proposed the name of the Insolvency Professional. The application is liable to be admitted

Issues Involved:
1. Maintainability of the application under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Existence of a pre-existing dispute regarding the quality and quantity of goods transported.
3. Delivery and receipt of the demand notice by the Corporate Debtor.
4. Outstanding amount due and payable by the Corporate Debtor.
5. Compliance with Section 9(5) of the Insolvency & Bankruptcy Code, 2016.

Detailed Analysis:

1. Maintainability of the Application:
The Corporate Debtor contended that the Applicant Company, represented by its sole Proprietor Mr. Kailash Chandra Agarwal, is not a "person" within the meaning of Section 2(23) of the Insolvency & Bankruptcy Code, 2016. However, the Tribunal found this objection to be unsustainable, stating that the application filed by M/s. Kishore and Company, represented by its sole Proprietor, is perfectly legal and maintainable.

2. Existence of a Pre-existing Dispute:
The Corporate Debtor argued that there was a dispute regarding the quality and quantity of coal transported, communicated verbally on 07-08-2015 and 08-09-2015, and through letters on 08-08-2015 and 10-09-2015. However, the Tribunal noted that there was no supporting proof provided to substantiate these claims. The Operational Creditor denied receiving any such dispute notice, and the Tribunal found no evidence to support the Corporate Debtor's contention, thus ruling out the existence of a pre-existing dispute.

3. Delivery and Receipt of the Demand Notice:
The Corporate Debtor claimed that the demand notice issued by the Operational Creditor was not delivered. The Tribunal, however, found this contention to be untrue, as the track consignment produced by the Operational Creditor evidenced the delivery of the demand notice on 10-01-2018. Thus, the Tribunal concluded that the demand notice was duly delivered to the Corporate Debtor.

4. Outstanding Amount Due:
The Operational Creditor demanded ?31,20,806/- based on two invoices dated 27-07-2015 and 27-08-2015, with 18% interest per annum. The Corporate Debtor had paid ?21,92,374/- against one bill dated 30-10-2015 but failed to pay the remaining amount. The Tribunal noted that the Ledger Account (Annexure "H") did not prove that the amount demanded was paid by the Corporate Debtor. Instead, it showed that the transactions were admitted by the Corporate Debtor, and TDS was deducted on the payment demanded as per the two bills. Therefore, the Tribunal concluded that the outstanding amount claimed by the Operational Creditor was due.

5. Compliance with Section 9(5) of the Insolvency & Bankruptcy Code, 2016:
The Tribunal observed that the Operational Creditor had produced an affidavit under Section 9(3)(b) confirming that no notice of dispute had been given by the Corporate Debtor. Although the Operational Creditor did not produce a certificate from financial institutions as required under Section 9(3)(c), the statement of accounts was provided. The Tribunal found that the Operational Creditor succeeded in proving the issuance and delivery of the demand notice along with the invoices. However, Section 9(5)(e) was not fully met as the Operational Creditor did not propose the name of the Insolvency Professional. Despite this, the Tribunal admitted the application.

Orders:
1. The application filed by the Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016, for initiating Corporate Insolvency Resolution Process against the Corporate Debtor is admitted.
2. A moratorium and public announcement are declared in accordance with Sections 13 and 15 of the IBC, 2016.
3. The moratorium prohibits the institution of suits, transferring of assets, foreclosure actions, and recovery of property by owners or lessors.
4. Essential goods or services to the Corporate Debtor shall not be terminated, suspended, or interrupted during the moratorium period.
5. The moratorium shall be effective from the date of admission until the completion of the corporate insolvency resolution process or approval of the resolution plan or liquidation order.
6. Shri Sandip Kr. Kejriwal is appointed as Interim Resolution Professional to ascertain the particulars of creditors and convene a Committee of Creditors for evolving a resolution plan.
7. The Interim Resolution Professional is directed to convene a meeting of the Committee of Creditors and submit the resolution passed by the Committee within 105 days from the insolvency commencement date.
8. Registry is directed to communicate the order to the Operational Creditor, the Corporate Debtor, and the Interim Resolution Professional by Speed Post and email.
9. The matter is listed for the filing of the progress report on 05.11.2018.

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