2019 (10) TMI 966 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor had defaulted in repaying a sum - Existence of default - HELD THAT - There is absolutely no dispute about supply of rubber for which invoices were raised. There is also no dispute with regard to the amounts covered by invoices which were not paid and Corporate Debtor had committed default. The alleged dispute is not substantiated and it is only imaginary, illusory and not supported by any evidence - petition liable to be admitted. Petition admitted.

Summary

Issues Involved:
1. Default in repayment by Corporate Debtor.
2. Pre-existing dispute regarding the quality of goods supplied.
3. Time-barred debt claim.
4. Appointment of Interim Resolution Professional (IRP).
5. Declaration of moratorium.

Issue-wise Detailed Analysis:

1. Default in Repayment by Corporate Debtor:
The petition was filed by the Operational Creditor, M/s. Eswar Rubber Private Limited, under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Pelican Rubber Limited, for defaulting on a sum of ?7,17,65,096/-. The Operational Creditor supplied "Butyl Reclaimed Rubber" to the Corporate Debtor and raised invoices amounting to ?5,73,15,250/- between 06.09.2014 and 25.09.2015. The Corporate Debtor issued cheques for the outstanding amount, which were dishonored due to "Insufficient Funds."

2. Pre-existing Dispute Regarding the Quality of Goods Supplied:
The Corporate Debtor contended that there was a pre-existing dispute over the quality of goods supplied, claiming that the Operational Creditor supplied inferior quality rubber, resulting in a loss of ?11,68,64,716/-. The Corporate Debtor had filed a civil suit for recovery of this amount. However, the Operational Creditor argued that no such dispute was raised before the notice under Section 138 of the Negotiable Instruments Act was issued, and that the dispute was frivolous and unsupported by evidence. The Tribunal held that the dispute raised by the Corporate Debtor was not substantiated and was merely an assertion without evidence.

3. Time-barred Debt Claim:
The Corporate Debtor argued that the debt was time-barred and hence the application was barred by limitation. However, the Tribunal did not find merit in this argument as the Operational Creditor had continuously supplied goods and raised invoices, and the Corporate Debtor had acknowledged the debt through cheques and C-Forms.

4. Appointment of Interim Resolution Professional (IRP):
The Operational Creditor did not name an Interim Resolution Professional (IRP) and requested the Tribunal to appoint one. The Tribunal appointed Mr. Nukala Sreedhar as the IRP from the panel recommended by the Insolvency and Bankruptcy Board of India (IBBI). The IRP was directed to file his written communication and relevant papers immediately before the Registrar of the Tribunal.

5. Declaration of Moratorium:
The Tribunal admitted the petition under Section 9 of the IBC, 2016, and declared a moratorium as per Section 14 of the Code. The moratorium prohibits the institution or continuation of suits or proceedings against the Corporate Debtor, transferring or disposing of its assets, and recovery of property by an owner or lessor. The Tribunal directed the IRP to perform his functions as per the Code and ordered the Petitioner to pay ?1,00,000/- to the IRP for expenses, subject to adjustment by the Committee of Creditors.

Conclusion:
The Tribunal admitted the petition and initiated the Corporate Insolvency Resolution Process against the Corporate Debtor, appointing an Interim Resolution Professional and declaring a moratorium to protect the interests of all parties involved. The Tribunal found that the alleged dispute by the Corporate Debtor was unsupported by evidence and that the debt was not time-barred.