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2019 (8) TMI 269 - Tri - Insolvency and BankruptcyAdmissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate Debtor - default in payment against various invoices for supply of goods related to the welding fabrication of industrial consumables - existence of dispute or not - HELD THAT - The Corporate Debtor has not raised any dispute regarding the supply of goods neither has it stated that the debt had been repaid. The only contention of the Corporate Debtor is that the Operational Creditor is a related party of an ex-employee of the Corporate Debtor and that this fact was not disclosed to the management of the Corporate Debtor and the Operational Creditor has taken advantage by charging higher prices of the goods than the market value. It is pertinent to note that Mr. Shibu Nadar left the employment of the Corporate Debtor in November 2014. Since then, the Corporate Debtor has not raised any dispute until the first petition is filed under section 9 of I B Code and withdrawn in the year 2017. This contention of the Corporate Debtor is a mere argument without any supporting evidence and cannot be taken as a pre-existing dispute for rejection of section 9 Petition. The application made by the Operational Creditor is complete in all respects as required by law, and it clearly shows that the operational debt is due and has not been paid. Thus it is clear that petition filed U/S 9 of the Code deserves to be admitted - petition admitted - moratorium declared.
Issues Involved:
1. Default in payment of operational debt. 2. Acknowledgment of debt by the Corporate Debtor. 3. Existence of a pre-existing dispute. 4. Withdrawal and re-filing of the insolvency petition. 5. Appointment of Interim Resolution Professional (IRP). 6. Declaration of moratorium under section 14 of the I&B Code. Detailed Analysis: 1. Default in Payment of Operational Debt The petitioner, Shine & Shine Enterprises, filed a company petition under section 9 of the Insolvency & Bankruptcy Code, 2016, against Canaan Engineering Private Limited for initiating the Corporate Insolvency Resolution Process (CIRP). The Corporate Debtor defaulted in paying ?25,54,786.91 against various invoices for the supply of goods related to welding fabrication of industrial consumables. The principal amount in default was ?15,53,849, with an interest of ?10,00,937.91. 2. Acknowledgment of Debt by the Corporate Debtor The Operational Creditor argued that the Corporate Debtor accepted the invoices and challans, proving the debt's acknowledgment. Additionally, a letter dated 05.11.2015 from the Corporate Debtor admitted an outstanding unpaid debt of ?18,51,451 and proposed a payment schedule. The Corporate Debtor made a payment of ?3,00,000 till 14.10.2016 but failed to clear the remaining debt. 3. Existence of a Pre-existing Dispute The Corporate Debtor claimed an existing dispute, alleging that the Operational Creditor, in collusion with an ex-employee, caused a loss to the company by supplying materials at higher prices. However, the tribunal found no substantial evidence supporting this claim. The tribunal referenced the Supreme Court's judgment in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, emphasizing that a dispute must be pre-existing and not a mere assertion without evidence. 4. Withdrawal and Re-filing of the Insolvency Petition The Operational Creditor initially filed an insolvency petition on 01.07.2017, which was withdrawn on 06.09.2017 due to technical lapses, with liberty to file afresh. The current petition was filed on 27.03.2018. The tribunal noted that the Corporate Debtor attempted to create a dispute after the first petition's withdrawal, which was considered an afterthought. 5. Appointment of Interim Resolution Professional (IRP) The tribunal observed that the Operational Creditor did not propose an IRP's name. Consequently, the tribunal appointed Mr. Anish Gupta, Registration No. IBBI/IAP-002/IP-N00285/2017-18/10843, as the IRP with his consent in Form 2, confirming no disciplinary proceedings against him. 6. Declaration of Moratorium under Section 14 of the I&B Code The tribunal admitted the petition and declared a moratorium under section 14 of the I&B Code, prohibiting: - The institution or continuation of suits or proceedings against the Corporate Debtor. - Transferring, encumbering, or disposing of any assets or legal rights. - Actions to foreclose or enforce any security interest. - Recovery of any property occupied by the Corporate Debtor. The tribunal also ensured the supply of essential goods or services to the Corporate Debtor would not be interrupted during the moratorium period. The moratorium would remain effective until the completion of the CIRP or the approval of a resolution plan or liquidation order. Order The tribunal directed the registry to communicate the order to the Operational Creditor, Corporate Debtor, and IRP immediately. The compliance report by the designated registrar was to be submitted on the same day.
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