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2019 (7) TMI 216 - Tri - Insolvency and BankruptcyAdmissibility of petition - Initiation of Corporate Insolvency Resolution process against Corporate Debtor - default in making payment with interest - Section 9 of Insolvency Bankruptcy Code read with Rule 6 of Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT - This Bench having been satisfied with the Application filed by the Operational Creditor which is in compliance of provisions of section 8 9 of the Insolvency and Bankruptcy Code admits this Application declaring moratorium - Petition admitted.
Issues:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) based on default in payment by the Corporate Debtor. 2. Validity of demand notice, application format, and supporting documents. 3. Classification of debt as operational debt and the petitioner as an operational creditor. 4. Availability of alternative remedies and objections raised by the Corporate Debtor. Issue 1: Initiation of Corporate Insolvency Resolution Process (CIRP) The Company Petition was filed by the Petitioner against the Corporate Debtor for default in payment, seeking to trigger the Corporate Insolvency Resolution Process (CIRP) under the Insolvency & Bankruptcy Code. The Petitioner alleged that the Corporate Debtor failed to make a payment of ?8,42,055, inclusive of interest, leading to the filing of the petition under Section 9 of the Code. Issue 2: Validity of demand notice, application format, and supporting documents The Petitioner supplied goods to the Corporate Debtor and issued an invoice with terms requiring payment with 24% interest on delayed payments. A demand notice was sent to the Corporate Debtor, which disputed the liability but admitted to the transaction. The Corporate Debtor raised objections regarding the format of the demand notice and application, but the Tribunal found them to be in compliance with the Code. Issue 3: Classification of debt as operational debt and the petitioner as an operational creditor The Corporate Debtor argued that the debt claimed did not fall under operational debt as defined in the Code. However, the Tribunal determined that the debt for the supply of goods constituted operational debt, making the Petitioner an operational creditor. The objections raised by the Corporate Debtor on this ground were deemed unsustainable. Issue 4: Availability of alternative remedies and objections raised by the Corporate Debtor The Corporate Debtor contended that the Petitioner had alternative legal remedies available and that the petition was an attempt to coerce payment. However, the Tribunal rejected this argument, emphasizing the existence of a debt and default, lack of dispute raised by the Corporate Debtor before the demand notice, and the nature of the debt as operational. The Tribunal admitted the petition, declared a moratorium, and appointed an interim resolution professional to oversee the insolvency resolution process.
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