2019 (7) TMI 579 - Tri - Insolvency and Bankruptcy

Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Existence of default or not? - HELD THAT - The respondent has admitted its inability to clear the overdue payment. That, during the course of hearing also Learned lawyer appearing on behalf of the respondent fairly admitted that the respondent company is not in a position to pay the debt amount. The operational debt is due to the Applicant. Therefore, Applicant is an Operational Creditor within the meaning of (sub-section (20) of Section 5) of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default. The Application filed by the Applicant is complete in all respects - it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code. Petition admitted.

Summary

Issues Involved:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for operational debt due from the respondent company.

Analysis:
1. Identification of Parties: The applicant, an operational creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the respondent company, which admitted its inability to clear the overdue payment.

2. Debt Details: The applicant claimed an amount of ?36,06,136 as operational debt from the respondent, including the principal amount for the supply of goods and interest. The applicant supported the claim with detailed invoices and evidence of dispatch and delivery of goods.

3. Respondent's Response: The respondent acknowledged the debt but cited financial difficulties and a temporary inability to repay the outstanding amount. The respondent's affidavit stated a delay in payment rather than an intention to default.

4. Legal Findings: The Adjudicating Authority found that the respondent admitted its inability to pay the debt, establishing the existence of debt and default. The application was deemed complete, meeting the necessary requirements under the Code.

5. Appointment of Interim Insolvency Professional: The Authority appointed an interim resolution professional to oversee the insolvency resolution process. The professional was tasked with declaring a moratorium, making a public announcement, and calling for claim submissions as per the Code.

6. Initiation of Insolvency Resolution Process: Based on the material available and discussions, the Authority decided to admit the application under Section 9(5)(1) of the Code, initiating the insolvency resolution process.

7. Moratorium Declaration: A moratorium was declared to prohibit various actions against the corporate debtor, including suits, asset transfers, and recovery of property. Essential services to the debtor were to continue during this period.

8. Effect of Moratorium: The moratorium was effective from the date of the order receipt until the completion of the insolvency resolution process or until further orders were passed by the Bench.

9. Disposal of Petition: The petition was admitted, and the order was disposed of with no costs imposed. Communication of the order was directed to the relevant parties and the appointed Interim Insolvency Resolution Professional.