2019 (7) TMI 1131 - Tri - Insolvency and Bankruptcy

Admissibility of petition - initiation of Corporate Insolvency Resolution Process (CIRP) - corporate debtor - HELD THAT - The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This Authority is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt claimed by the Operational Creditor. Therefore. Application is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted.

Summary

Issues Involved:
1. Default in payment of outstanding debt by the Corporate Debtor.
2. Compliance with the requirements of the Insolvency & Bankruptcy Code, 2016.
3. Objection regarding the limitation period.
4. Validity of the Agency Agreement and the entitlement of commission.
5. Defense raised by the Corporate Debtor regarding breach of the Agency Agreement.
6. Admission and initiation of the Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis:

1. Default in Payment of Outstanding Debt by the Corporate Debtor:
The Operational Creditor claimed an amount of ?1,83,59,520/- as principal along with interest totaling ?2,82,99,314/- against the Corporate Debtor. The Corporate Debtor failed to pay this amount. The Operational Creditor had sent a legal notice on 04.06.2015, which was replied to by the Corporate Debtor on 02.07.2015, admitting a partial liability of ?46,96,560/- contingent upon the realization of ?1,42,87,504 from customers.

2. Compliance with the Requirements of the Insolvency & Bankruptcy Code, 2016:
The Operational Creditor filed the application under Section 9 of the I&B Code, 2016. The application included a demand notice issued under Section 8 of the I&B Code, 2016, and a bank certificate as required under Section 9(3)(c). The Tribunal found the submission by the Operational Creditor regarding compliance convincing and noted that the Corporate Debtor had replied to the demand notice.

3. Objection Regarding the Limitation Period:
The Corporate Debtor argued that the application was barred by limitation. However, the Tribunal noted that the Corporate Debtor had acknowledged the debt in its reply dated 02.07.2015, and the application was filed on 27.03.2018, within the limitation period. Therefore, the objection regarding limitation was rejected.

4. Validity of the Agency Agreement and the Entitlement of Commission:
The Tribunal examined the Agency Agreement dated 01.01.2013, which stipulated the terms for commission payment. The agreement was revoked on 06.06.2014, effective till 05.09.2014. The Operational Creditor claimed to have fulfilled its obligations under the agreement and sought the unpaid commission.

5. Defense Raised by the Corporate Debtor Regarding Breach of the Agency Agreement:
The Corporate Debtor argued that the Operational Creditor breached the terms of the Agency Agreement, leading to its termination. However, the Tribunal found that no documentary evidence was provided to support this claim. The Tribunal also noted inconsistencies in the Corporate Debtor's arguments and rejected the defense as spurious.

6. Admission and Initiation of the Corporate Insolvency Resolution Process (CIRP):
The Tribunal concluded that the Corporate Debtor had committed default in making the payment of the outstanding debt. Consequently, the application was admitted, and the commencement of the CIRP was ordered to be completed within 180 days. A moratorium was declared, prohibiting actions such as the institution of suits, transferring assets, and recovery of property by owners or lessors. An Interim Resolution Professional (IRP), Mr. Gopalsamy Ganesh Babu, was appointed to take charge of the Corporate Debtor’s management and proceed with the CIRP as per the provisions of the I&B Code, 2016.

Conclusion:
The Tribunal found the submissions by the Operational Creditor plausible and the defenses raised by the Corporate Debtor spurious and misleading. The application was admitted, and the CIRP was initiated with the declaration of a moratorium and the appointment of an IRP to manage the process.