2019 (3) TMI 878 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - petition has been filed in the required format and duly complies with the requirements of Section 9(3)(b) and 9(3)(c) of the Code - Corporate Debtor did not respond to the demand notice issued under Section 8 of the Code - Corporate Debtor submits that the goods having booked by the Operational Creditor with the concerned transporter, they were responsible for the shortfall - HELD THAT - Till the filing of the present petition, no dispute has been raised directly with the Operational Creditor. There is nothing on record to accuse the Operational Creditor of the shortfall in the quantity received. At this stage, raising such a dispute as a defence to ward off the resolution process is unsustainable. There is nothing on record to directly indict the Operational Creditor of being accused or being held guilty for the short supplies. Even otherwise, in the event of short supplies under the 3 invoices, the liability would be far in access of the threshold required for initiating the CIR process against the Corporate Debtor for non-payment of the dues. The claim that recoveries on the alleged ground of shortfall in supplies is vague and unenforceable. The dispute sought to be raised does not justify rejection of the petition. In view of the same, this petition merits consideration and is Admitted.

Issues:
1. Non-payment of outstanding liability by Corporate Debtor to Operational Creditor.
2. Dispute regarding the quality and quantity of goods supplied.
3. Initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code.
4. Appointment of Interim Resolution Professional.
5. Direction for deposit of funds by Operational Creditor.

Issue 1: Non-payment of outstanding liability by Corporate Debtor to Operational Creditor

The Operational Creditor, engaged in the supply of M.S. TMT Bars, filed a petition due to non-payment of ?34,33,750 under three invoices issued in October 2016 by the Corporate Debtor, involved in real estate projects. Despite repeated requests, the Corporate Debtor failed to settle the outstanding amount. The petition was filed under Section 8 of the Insolvency and Bankruptcy Code 2016, following a lack of response from the Corporate Debtor to the demand notice.

Issue 2: Dispute regarding the quality and quantity of goods supplied

The Corporate Debtor disputed the claim made by the Operational Creditor, stating that the amount claimed was inflated and the interest demand was unjustified due to the absence of an agreement for interest payment. The Corporate Debtor alleged inaccuracies in the Operational Creditor's ledger and highlighted a shortfall in material supply, leading to the filing of an FIR against the transporter. The Corporate Debtor argued that the shortfall was as high as 30%, necessitating a review of previous bills to reconcile the discrepancies.

Issue 3: Initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code

Upon reviewing the arguments and documents presented by both parties, the Tribunal found no substantial dispute raised by the Corporate Debtor against the Operational Creditor. The lack of correspondence or evidence attributing the shortfall directly to the Operational Creditor led the Tribunal to reject the Corporate Debtor's defense. The Tribunal deemed the dispute raised by the Corporate Debtor as insufficient to prevent the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor, thereby admitting the petition.

Issue 4: Appointment of Interim Resolution Professional

The Tribunal appointed an Interim Resolution Professional, Mr. Rameshwar Dayal, to oversee the resolution process and instructed him to comply with the relevant sections of the Insolvency and Bankruptcy Code. The Operational Creditor was directed to deposit ?2 Lakhs with the IRP for immediate expenses, which would be reimbursed upon the formation of the Committee of Creditors.

Issue 5: Direction for deposit of funds by Operational Creditor

The Operational Creditor was directed to communicate the order to both parties and the IRP, with further proceedings scheduled for January 25, 2019. The Tribunal emphasized the importance of depositing funds with the IRP to facilitate the resolution process effectively.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, Tribunal's findings, and the subsequent directions issued for the resolution process under the Insolvency and Bankruptcy Code.

← Previous Next →