2019 (9) TMI 1023 - Tri - Insolvency and Bankruptcy

Maintainability of application - Initiation of CIRP - Corporate Debtor failed to pay an outstanding amount - Existence of dispute or not - section 9 of the Insolvency and Bankruptcy Code, 2016, R/w Rule 6 of the Insolvency and Bankruptcy Rules, 2016 - HELD THAT - We are satisfied that the default in question has occurred, there is no existence of dispute, and the petition filed under Section 9 of I B Code, 2016 is complete and there are no disciplinary proceedings pending against the proposed resolution professional, Mr. Addanki Haresh. Petition admitted - moratorium declared.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 based on outstanding debt and default.

Analysis:
1. The petitioner, an Operational Creditor, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the respondent, a Corporate Debtor, due to an outstanding amount of ?66,87,540 as on 20.09.2018.

2. The respondent acknowledged the debt of ?49,08,042 as of 31.03.2018 but disputed the interest amount and claimed no willful default. They also raised issues regarding the quality of goods supplied and argued that the petition was time-barred as per the default date mentioned.

3. The Tribunal considered the provisions of the Code and relevant legal precedents. It highlighted that the existence of an undisputed debt exceeding ?1 lakh, absence of dispute, and adherence to procedural requirements are essential for admitting a petition under Section 9 of the Code.

4. The Tribunal emphasized that the Code is not a recovery forum but a mechanism for justified CIRP. It cited Supreme Court judgments to support the application of the Limitation Act to proceedings before the NCLT/NCLAT and the requirement of an undisputed debt for initiating CIRP.

5. After reviewing the facts, the Tribunal found that the default had occurred, there was no dispute, and the petition was complete. It noted the respondent's financial condition and lack of effort to settle the debt, leading to the decision to admit the petition and initiate CIRP.

6. The Tribunal issued directions to appoint an Insolvency Resolution Professional, impose a moratorium on legal actions against the corporate debtor, ensure continuity of essential services, and specified the effective date of the moratorium until the completion of the resolution process or liquidation.

7. Both the Operational Creditor and Corporate Debtor were instructed to cooperate with the Insolvency Resolution Professional and adhere to the provisions of the IBC, 2016. The IRP was tasked with submitting reports periodically, and the case was scheduled for further review on 15th April, 2019.