2020 (10) TMI 683 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence. of debt and dispute or not - HELD THAT - The present Respondent made efforts to raise a pre-existing dispute in order to get dismissal of the present I.B. Petition. However, he did not explain the reason as to why he made proposal for settlement by acknowledging its debt liability to the extent of ₹ 21.00 Lakhs and above but only sought for repayment schedule from September 2018 to April/March 2019. Thus, the admitted outstanding due is ₹ 21.00 Lakh and is requested to be paid till March 2019 - However, no settlement could be materialised. Hence, the debt is well established due to undisputed amount of ₹ 21.00 Lakhs and the default of payment has been occurred. Hence, the CIRP can be triggered in respect of the Corporate Debtor Company. The present I.B. Petition is filed under Section 9 of the code by an authorised signatory Mr. Anuj Saraf (Partner) found to be filed within limitation and is complete for the purpose of initiation of Corporate Insolvency Resolution Process (C.I.R.P.) in respect of the Corporate Company - Petition admitted - moratorium declared.

Summary

Issues:
1. Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Dispute regarding payment for supplied goods.
3. Existence of pre-existing dispute between parties.
4. Appointment of Insolvency Professional and declaration of moratorium.

Issue 1: Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The petition was filed by the Operational Creditor, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for non-payment of dues amounting to ?27,00,247/-. Despite issuing a demand notice, the Corporate Debtor did not make any payment towards the outstanding invoices. The Respondent raised a dispute regarding the quality of goods supplied, but the Petitioner maintained that the materials were of the required standards. The Tribunal found that the debt was established, with an admitted amount due of ?21.00 Lakhs, and the default of payment had occurred. Consequently, the CIRP was deemed necessary.

Issue 2: Dispute regarding payment for supplied goods:
The Respondent contended that there was a pre-existing dispute regarding the quality of the goods supplied, leading to wastage of LDPE material. The Respondent tried to establish the existence of a dispute by referring to emails highlighting complaints about the poor quality of the supplied papers. However, the Petitioner clarified that the materials supplied met the ordered standards and justified the outstanding debts against the Corporate Debtor. The Tribunal noted the Respondent's efforts to raise a pre-existing dispute but found that the debt was undisputed, leading to the admission of the IB petition.

Issue 3: Existence of pre-existing dispute between parties:
The Respondent claimed a pre-existing dispute related to the quality of goods supplied, citing emails and a settlement proposal made to the Petitioner. However, the Tribunal observed that the Respondent acknowledged a debt liability of ?21.00 Lakhs and sought a repayment schedule, indicating an admitted outstanding due. Despite the settlement proposal, no agreement was reached, leading to the conclusion that the debt was established, and the default of payment had occurred.

Issue 4: Appointment of Insolvency Professional and declaration of moratorium:
The Tribunal appointed an Insolvency Professional and declared a moratorium under Sections 13 and 14 of the Insolvency and Bankruptcy Code. The appointed professional was directed to make a public announcement of the moratorium and act in accordance with the provisions of the Code. The order of moratorium was to be effective from the date of the order until the completion of the Corporate Insolvency Resolution Process. The Tribunal also communicated the order to the concerned parties for compliance.

This detailed analysis of the judgment highlights the key issues addressed by the National Company Law Tribunal in the case, providing a comprehensive overview of the legal proceedings and decisions made.