2019 (1) TMI 576 - Tri - Insolvency and Bankruptcy

Initiation of insolvency resolution process against M/s Richa Industries Limited, the respondent-corporate debtor - Section 9 of the Insolvency & Bankruptcy Code, 2016 - Held that - It is pertinent to mention that the respondent-corporate debtor has not placed on record its own ledger account to contradict the entries made in the ledger account relied upon by the petitioner. Even the respondent has not pleaded that it raised any dispute about the defect in the quality of the material at any time before the demand notice was sent to the corporate debtor - there was no pre-existing dispute between the parties in order to disentitle the operational creditor to an order of admission. The petitioner being the operational creditor is not obliged to propose the name of the Resolution Professional to be appointed as the Interim Resolution Professional, but the petitioner in Part-III of the application Form, proposed the name of Mr. Arvind Kumar registered with IBBI having registration No. IBBI/IPA-001/IP-P00178/2017-18/10357 to be appointed as the Interim Resolution Professional in case the petition is admitted. The petition is admitted - The matter be now listed on 21.12.2018 for passing formal order of declaring moratorium and for appointment of the Interim Resolution Professional.

Summary

Issues Involved:
1. Competency of the person filing the petition.
2. Validity of the demand notice.
3. Existence of a pre-existing dispute.
4. Appointment of the Interim Resolution Professional (IRP).

Detailed Analysis:

1. Competency of the Person Filing the Petition:
The petition was filed by M/s Tata Blue Scope Steel Limited under Section 9 of the Insolvency & Bankruptcy Code, 2016, for initiating insolvency resolution against M/s Richa Industries Limited. Initially, there was no specific decision by the company for filing the petition, but a fresh resolution authorizing Mr. Riten Choudhury to represent the company was filed, removing the defect.

2. Validity of the Demand Notice:
The demand notice was issued by Ms. Sonali Thakur, Assistant Manager-Legal of the operational creditor. The respondent contested the authority of Ms. Thakur to issue the notice. However, the tribunal noted that the operational creditor had adopted the notice and filed the petition, thus sustaining the validity of the notice.

3. Existence of a Pre-Existing Dispute:
The respondent disputed the liability, claiming a pre-existing dispute regarding the quality and specifications of the supplied material. The tribunal referenced the Supreme Court's ruling in Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd., emphasizing that the adjudicating authority must reject the application if a genuine dispute exists. The tribunal found no evidence of a pre-existing dispute, as the respondent had acknowledged the debt and failed to raise any quality issues before the demand notice.

4. Appointment of the Interim Resolution Professional (IRP):
The petitioner proposed Mr. Arvind Kumar as the IRP. Initial defects in the Form 2 furnished by Mr. Kumar were rectified, and the tribunal found the revised Form 2 to be in order. Mr. Kumar declared that he was working as the Resolution Professional in five proceedings and had no pending disciplinary actions against him.

Conclusion:
The tribunal admitted the petition, finding no pre-existing dispute and validating the demand notice. The matter was listed for passing a formal order of declaring moratorium and for the appointment of the IRP.