2020 (12) TMI 915 - 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 - It is pertinent to note that the Applicant has placed on record all the invoices, stating that the Respondent itself had acknowledged the said invoices and copies of ledger account. Once the debt is shown as due, it is for Respondent to prove that there are no outstanding dues to be paid to the Applicant. There has been much cloud in the submission of the Respondent. Therefore, without any specific details of material particulars or evidence the fact of existence of a dispute cannot be sustained. In MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT , Apex Court held that the Court does not need to be satisfied that the defense is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application. The applicant has attached an affidavit in compliance of section 9(3)(b), also, it has attached the copy of Bank statements in compliance of the requirement of Section 9(3)(c) of the IBC 2016 - The registered office of respondent is situated in New Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The present application is within the prescribed limitation period. Thus, the present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted. Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Default in payment by the Corporate Debtor.
3. Pre-existing disputes raised by the Corporate Debtor.
4. Admission of operational debt by the Corporate Debtor.
5. Appointment of Interim Resolution Professional (IRP).
6. Moratorium under Section 14 of the Code.
7. Communication of the order to relevant parties.

Issue-wise Detailed Analysis:

1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016:
The application was filed by the Operational Creditor, M/s. C&S Electric Ltd., under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016), read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Unilec Engineers Limited.

2. Default in payment by the Corporate Debtor:
The Operational Creditor supplied electrical equipment to the Corporate Debtor between August 2016 and September 2017. The Corporate Debtor failed to make payments within the agreed period of 120 days from receipt of the materials. Post-dated cheques issued by the Corporate Debtor were dishonored due to insufficient funds. Despite several reminders and a demand notice dated 22.06.2018, the Corporate Debtor did not settle the outstanding dues amounting to ?2,01,63,267.13.

3. Pre-existing disputes raised by the Corporate Debtor:
The Corporate Debtor contended that the Operational Creditor delayed deliveries and supplied defective components for a project with BHEL, leading to penalties and liquidated damages. The Corporate Debtor claimed these issues predated the current transactions and were communicated through various emails and letters.

4. Admission of operational debt by the Corporate Debtor:
The Operational Creditor argued that the disputes raised by the Corporate Debtor were related to transactions before August 2016 and were not relevant to the current outstanding debt. The Corporate Debtor had admitted to the debt in an email dated 18.07.2018, assuring payment and requesting a meeting for repayment scheduling.

5. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Mansij Arya as the Interim Resolution Professional (IRP) since the Applicant had not proposed any name. The IRP was directed to take necessary steps under Sections 15, 17, 18, 20, and 21 of the Code.

6. Moratorium under Section 14 of the Code:
Upon admitting the application, a moratorium as per Section 14(1) of the Code was imposed, prohibiting actions against the Corporate Debtor. The provisions of Section 14(2) to 14(3) would apply during the moratorium period.

7. Communication of the order to relevant parties:
The Registry was instructed to communicate the order to the Operational Creditor, Corporate Debtor, IRP, and the Registrar of Companies, NCR, New Delhi, within seven days. The Registrar of Companies was directed to update the status of the Corporate Debtor on their website.

Conclusion:
The Tribunal found the application complete and established the default in payment of the operational debt beyond doubt. Hence, the application was admitted, and the CIRP against the Corporate Debtor was initiated.