2019 (11) TMI 771 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - debt due and payable - existence of dispute or not - HELD THAT - This adjudicating authority is of the considered view that operational debt is due to the Applicant. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default and service is complete. Application filed by the Applicant is complete in all respects - Application admitted - moratorium declared.

Summary

Issues:
- Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 to trigger Insolvency Resolution Process.
- Validity of the demand notice and power of attorney.
- Existence of operational debt and occurrence of default.
- Appointment of Interim Resolution Professional.
- Declaration of moratorium and initiation of Corporate Insolvency Resolution Process.

Analysis:
1. The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 to initiate the Insolvency Resolution Process against the corporate debtor. The operational creditor claimed that the debt was pending since the due date of the invoices, with a total amount of ?10,89,433, including interest. The applicant provided various documents supporting the claim, including invoices, purchase orders, and correspondence with the corporate debtor.

2. The respondent raised objections regarding the demand notice and power of attorney. They disputed the receipt of the demand notice and the validity of the authority letter issued to the petitioner. The respondent also argued that the interest claimed was false and that the petitioner failed to rebut the objections raised. Additionally, the respondent cited liquidity problems due to a recession in the real estate market.

3. The Tribunal examined the evidence presented by both parties. It found that the demand notice was acknowledged by the respondent, and the balance confirmation indicated an amount due to the petitioner. The Tribunal also validated the power of attorney issued to the petitioner, stating that it was in order.

4. The Tribunal assessed the criteria for determining an application under Section 9 of the Act, including the existence of operational debt exceeding ?1.00 lac, the due and payable status of the debt, and the absence of a dispute between the parties. It referred to the Legislative Guide on Insolvency Law and concluded that the operational debt was due to the applicant, who qualified as an Operational Creditor under the Code.

5. The Tribunal admitted the application, appointed an Interim Resolution Professional, and declared a moratorium to initiate the Corporate Insolvency Resolution Process. It directed the Insolvency Resolution Professional to make a public announcement and call for submission of claims. The moratorium was imposed to prohibit certain actions against the corporate debtor and ensure the continuity of essential services during the process.

6. The order of moratorium was to remain in effect until the completion of the corporate insolvency resolution process or until the resolution plan was approved or liquidation was ordered. The Tribunal disposed of the petition with no costs and instructed the communication of the order to all relevant parties involved.