2020 (3) TMI 28 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - service of SCN - whether the demand notice in Form No. 3 dated 17.12.2018 was properly served? - HELD THAT - The demand notice dated 17.12.2018 was sent at the address as per the master data at Page No. 27 of the petition in which the registered office is shown as B-363, 364 365, Nehru Ground, NIT, Faridabad, Haryana - 121001. Also, the postal receipts alongwith the tracking reports showing successful delivery of the notice are found to be attached with Annexure H of the petition. Therefore, the statutory demand notice was duly delivered upon the corporate debtor. Whether the operational debt was disputed by the corporate debtor? - HELD THAT - The respondent in its reply dated 27.09.2019, wherein it is specifically stated in Para No. 8 that as per the ledger account maintained by the respondent-corporate company in respect of the petitioner was certified and provided to applicant on 26.06.2018 acknowledging the existing debt and liability was of ₹ 22,78,708/-. Thus, there is no dispute as to the liability between the corporate debtor and the operational creditor. It has been proved beyond doubt that the corporate debtor has failed to make payments of the aforesaid amount due as mentioned in the statutory notice till date. As a statutory requirement under section 9(3)(c) of the Code, an affidavit dated 03.04.2019 has been placed by the operational creditor stating that no notice is given by the respondent-corporate debtor in terms of Section 8(2)(a) of the Code and the corporate debtor has not brought the notice the existence of any dispute in relation to the unpaid operational debt - It is also observed that the conditions under section 9 of the Code stand satisfied. The applicant-operational creditor states that the liability of the respondent-corporate debtor is undisputed. The petition for initiation of the CIRP process is admitted - moratorium is declared.

Summary

Issues Involved:
1. Proper service of demand notice.
2. Dispute over operational debt.
3. Compliance with Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016.
4. Admission of Corporate Insolvency Resolution Process (CIRP) petition.
5. Declaration of moratorium.
6. Appointment of Interim Resolution Professional (IRP).

Issue-wise Detailed Analysis:

1. Proper Service of Demand Notice:
The tribunal examined whether the demand notice in Form No. 3 dated 17.12.2018 was properly served. The notice was sent to the registered office of the corporate debtor, as per the master data provided. The postal receipts and tracking reports confirmed successful delivery of the notice, thus fulfilling the statutory requirement.

2. Dispute Over Operational Debt:
The tribunal considered whether the operational debt was disputed by the corporate debtor. The respondent’s reply acknowledged the existing debt and liability of ?22,78,708/-. There was no dispute regarding the liability between the corporate debtor and the operational creditor, as the respondent admitted the debt in its ledger account.

3. Compliance with Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016:
The tribunal reviewed the provisions of Section 9(5)(i) of the Code, which mandates the adjudicating authority to admit the application if:
- The application is complete.
- There is no payment of the unpaid operational debt.
- The invoice or notice for payment has been delivered.
- No notice of dispute has been received.
- No disciplinary proceeding is pending against any proposed resolution professional.

The tribunal found the application complete and noted that the corporate debtor had not paid the debt, nor was there any record of dispute. Additionally, there were no pending disciplinary proceedings against any resolution professional.

4. Admission of Corporate Insolvency Resolution Process (CIRP) Petition:
Based on the compliance with Section 9(5)(i), the tribunal admitted the petition for initiating the CIRP against the corporate debtor, SPG Global Distribution Pvt. Ltd. The tribunal was satisfied that the corporate debtor had defaulted on its payment obligations, and the operational creditor had proved the debt and default, which exceeded ?1 lakh.

5. Declaration of Moratorium:
The tribunal declared a moratorium under Section 14(1) of the Code, which included:
- Suspension of suits or proceedings against the corporate debtor.
- Prohibition on transferring or disposing of assets.
- Restriction on actions to recover or enforce security interests.
- Prevention of recovery of property occupied by the corporate debtor.

The moratorium would remain effective until the completion of the CIRP or approval of a resolution plan, or an order for liquidation.

6. Appointment of Interim Resolution Professional (IRP):
The tribunal appointed Mr. Divyanshu Mishra as the Interim Resolution Professional (IRP). The IRP's credentials were verified, and no adverse findings were reported. The tribunal directed the IRP to:
- Suspend the powers of the Board of Directors.
- Manage the affairs of the corporate debtor.
- Make a public announcement of the CIRP initiation.
- Cooperate with the corporate debtor’s management.
- Constitute a Committee of Creditors and file a report within thirty days.
- Send regular progress reports to the tribunal.

Conclusion:
The tribunal admitted the CIRP petition, declared a moratorium, and appointed an IRP, ensuring compliance with the Insolvency and Bankruptcy Code, 2016. The tribunal’s decision was based on the undisputed debt and the corporate debtor’s failure to fulfill its payment obligations.