2020 (9) TMI 892 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Operational Debt or not - existence of debt and dispute or not - HELD THAT - The unpaid petitioner, who rendered services to the Corporate Debtor, comes within the purview of 'Operational creditor' - The procedure in relation to the Initiation of Corporate Insolvency Resolution Process by the Operational Creditor is delineated under Section 9 of the Code. The present application filed by operational creditor, accordingly, has to be dealt with in terms of Section 9 of the Code. Sub-section (1) of Section 9 mandates filing of the petition only after expiry of the period of 10 days from the date of delivery of notice or invoice demanding payment under sub-section (1) of Section 8 - In the present case admittedly the demand notice in Form-3 as per Section 8 of the Code was sent on 09.10.2019. It is thus seen that before filing the present application under Section 9 of the Code, requisite notice under Section 8 was duly served on the Respondent. In response to Section 8 notice, respondent corporate debtor has filed its reply acknowledging the outstanding amount and expressed its inability to pay the debt due to financial difficulty. The present application under Section 9 of the Code has been filed in requisite Form-5, wherein it was specifically mentioned that in the reply received from the corporate debtor there has been admission of debt and default and no dispute was raised against the claim of the applicant operational creditor. The application under Section 9 is thus complete and the required particulars have been furnished along with details of subsistence of default - in compliance of sub-section (3) (b) and (C) of Section 9 of the Code, the petitioner has affirmed that respondent corporate debtor has not raised any dispute in respect of the unpaid operational debt. There is a clear admission of debt and default and therefore there is no need to comply with any additional requirement as provided in Clauses (d) and (e) of sub-section (3) of Section 9 of the Code - In the present application all the aforesaid requirements have been satisfied. It is seen that the application preferred by applicant operational creditor is complete in all respect. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the applicant operational creditor. Respondent company also did not raise any dispute regarding the existence of operational debt. In fact, the claim of default committed by the corporate debtor has not been denied. Once the application is complete and in the absence of any dispute and with the subsistence of default, the application is liable to be admitted. Application admitted.

Summary

Issues Involved:
1. Jurisdiction of the Tribunal.
2. Non-payment of operational debt.
3. Admission of debt and default by the corporate debtor.
4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code, 2016.
5. Appointment of Interim Resolution Professional.
6. Declaration of moratorium.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Tribunal confirmed its territorial jurisdiction over the matter as the registered office of the respondent corporate debtor is located in Delhi. This is in accordance with sub-section (1) of Section 60 of the Insolvency and Bankruptcy Code, 2016.

2. Non-payment of operational debt:
The operational creditor, M/s. Adonis Electronics Pvt. Ltd, supplied air conditioners to the corporate debtor, M/s. Saka Ltd., between April 6, 2018, and September 25, 2018, amounting to ?13,30,662/-. Despite reminders and a demand notice sent on October 9, 2019, the corporate debtor failed to make the payment. The corporate debtor acknowledged the debt and expressed willingness to pay but cited financial distress as the reason for non-payment.

3. Admission of debt and default by the corporate debtor:
The corporate debtor admitted the outstanding debt and default in its reply to the petition dated January 23, 2020. The Tribunal noted that the definition of "default" under Section 3(12) includes non-payment of even part of the debt once it becomes due and payable. The corporate debtor's admission of non-payment constituted a clear occurrence of default.

4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code, 2016:
The operational creditor followed the procedure outlined in Section 9 of the Code. The demand notice was sent as per Section 8 on October 9, 2019, and the application was filed in requisite Form-5. The corporate debtor did not dispute the claim in its reply, fulfilling the requirements of Section 9(5)(i)(a) to (d). The application was deemed complete with all necessary particulars and evidence of default.

5. Appointment of Interim Resolution Professional:
The petitioner proposed the name of Mr. Sanjay Kumar Singh as the Interim Resolution Professional (IRP). He satisfied the requirements of Section 7(3)(b) of the Code, with no disciplinary proceedings pending against him. The Tribunal appointed Mr. Sanjay Kumar Singh as the IRP.

6. Declaration of moratorium:
The Tribunal declared a moratorium under Section 14 of the Code, effective from the date of the admission order until the completion of the Corporate Insolvency Resolution Process (CIRP). The moratorium included prohibitions on:
- The institution or continuation of suits or proceedings against the corporate debtor.
- Transferring or disposing of any assets of the corporate debtor.
- Actions to foreclose or enforce security interests.
- Recovery of property by owners or lessors.

The moratorium does not apply to transactions notified by the Central Government or the supply of essential goods or services. The IRP is tasked with managing the corporate debtor's affairs and preserving its property value, with all personnel legally obligated to assist.

Conclusion:
The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, and initiated the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. The moratorium was declared, and Mr. Sanjay Kumar Singh was appointed as the Interim Resolution Professional. The Registrar of Companies was directed to update the status of the corporate debtor and notify the public.