2020 (10) TMI 7 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - existence of debt and dispute or not - Service of notice - whether the demand notice in Form No.3 dated 08.03.2019 was properly served? - HELD THAT - The demand notice dated 08.03.2019 was sent at the address as per the master data at Page No.22 of the petition in which the registered office is shown as Jalalabad Road, Muktsar, Punjab - 152026. Copy of the postal receipt along with tracking report and email are attached as Annexure-8 (Colly) of the petition. It is submitted that the Corporate Debtor has chosen not to reply to the demand notice dated 08.03.2019. Whether the operational debt was disputed by the corporate debtor? - HELD THAT - The respondent corporate debtor has neither filed any reply to the petition nor has disputed the liability towards the operational creditor. Thus, there is no dispute as to the liability between the corporate debtor and the operational creditor. It is also observed that till the last date of hearing, there has been no representation from the respondent-corporate debtor, hence the respondent can be proceeded ex parte and accordingly this CP may be admitted. Pre-existing dispute or not? - HELD THAT - As a statutory requirement under Section 9(3)(b) of the Code, an affidavit dated 06.05.2019 (pages 20 21 of the petition) has been placed by the operational creditor stating that despite service of the demand notice dated 08.03.2019, till the date of filing of the present application, Corporate Debtor did not raise any dispute qua the outstanding payment and even no dispute was pending or arose by the corporate debtor qua the outstanding amount even prior to the sending the statutory demand notice dated 08.03.2019. We have held above that the demand notice in Form No.3 was properly delivered by the Operational Creditor and no pre-existing dispute is proved - It has been shown that the corporate debtor has failed to make payment of the ₹ 19,00,000/- as due after receiving payment of ₹ 8 lakhs vide two transactions, first an amount of ₹ 3 lakhs on 09.04.2019 and secondly ₹ 5 lakhs on 22.04.2019 till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. The applicant-operational creditor states that from the abovementioned fact it is clear that the liability of the respondent-corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is more than ₹ 1 lac by the respondent-corporate debtor. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition for initiation of the CIRP process in the case of the Corporate Debtor M/s. Evershine Solvex Private Limited, is admitted - moratorium declared.

Summary

Issues Involved:

1. Proper service of demand notice.
2. Dispute of operational debt by the corporate debtor.
3. Satisfaction of conditions under Section 9 of the Insolvency and Bankruptcy Code, 2016.
4. Admission of the petition for initiation of Corporate Insolvency Resolution Process (CIRP).
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 08.03.2019 was properly served. The notice was sent to the registered address of the corporate debtor as per the master data provided in the petition. The operational creditor submitted postal receipts and tracking reports as evidence of service. The corporate debtor did not respond to the notice, indicating proper service.

2. Dispute of Operational Debt by the Corporate Debtor:
The Tribunal considered whether the operational debt was disputed by the corporate debtor. The corporate debtor neither filed a reply to the petition nor disputed the liability towards the operational creditor. Consequently, there was no dispute regarding the liability, and the corporate debtor was proceeded against ex parte.

3. Satisfaction of Conditions under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal reviewed the provisions of Section 9(5)(i) of the Code, which require the application to be complete, unpaid operational debt to exist, delivery of invoice or notice for payment, no notice of dispute, and no disciplinary proceedings against the proposed resolution professional. The Tribunal confirmed that these conditions were satisfied, as the operational creditor's application was complete, the unpaid debt was ?19,00,000, and there was no pre-existing dispute or disciplinary proceedings.

4. Admission of the Petition for Initiation of CIRP:
The Tribunal found the application in Form No.5 to be complete and the operational debt undisputed. The debt amount was more than the statutory threshold of ?1 lakh. Consequently, the Tribunal admitted the petition for initiating the CIRP against the corporate debtor.

5. Declaration of Moratorium:
The Tribunal declared a moratorium in accordance with Section 14 of the Code, which included:
a) Suspension of suits or proceedings against the corporate debtor.
b) Prohibition on transferring or disposing of the corporate debtor's assets.
c) Suspension of actions to foreclose or enforce security interests.
d) Prohibition on recovery of property by owners or lessors.

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

6. Appointment of Interim Resolution Professional (IRP):
The operational creditor did not propose a resolution professional, so the Tribunal referred to the Insolvency and Bankruptcy Board of India (IBBI) for a recommendation. The Tribunal appointed Mr. Anjum Goyal as the IRP, directing him to take control of the corporate debtor's assets, make a public announcement, manage the corporate debtor's affairs, and constitute a Committee of Creditors. The IRP was also instructed to submit regular progress reports to the Tribunal.

Conclusion:
The Tribunal admitted the petition for initiating CIRP against the corporate debtor, declared a moratorium, and appointed an IRP, ensuring compliance with the Insolvency and Bankruptcy Code, 2016.