2021 (1) TMI 344 - Tri - Insolvency and Bankruptcy

Maintainability of application - Corporate Debtor failed to make repayment of its debt - operational creditor/applicant - applicant has stated that despite repeated reminders the respondent has not paid the outstanding operational debt - issuance of demand notice - HELD THAT - The demand notice issued by the applicant under section 8 of the I B Code on 18.12.2019 has been served upon the corporate debtor - On perusal of the reply filed by the corporate debtor it is found that the contentions raised in defence of the operational debt are vague ambiguous and up-through merely to raise unnecessary and false dispute to escape the provisions of Insolvency and Bankruptcy Code 2016. Moreover no documentary proof is provided by the corporate debtor in support to the averments which thus makes it evident that the dispute is an after-thought post the issuance of the demand notice. Other contentions raised in the reply by the corporate debtor appears to be a part of moonshine defence which devoid of merits. On perusal of the record it is also found that the instant petition filed by the applicant is well within limitation and there is no denial of the operational debt or any pre-existing dispute regarding the operational debt from the side of the corporate debtor - In the instant application from the material placed on record by the Applicant this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt due and payable to the Applicant - The documents produced by the operational creditor clearly establish the debt and there is default on the part of the Corporate Debtor in payment of the operational debt . Thus this adjudicating authority is of the considered view that operational debt is due to the Applicant and it fulfilled the requirement of I B Code. No dispute has been raised by the respondent at any point of time. That Applicant is an Operational Creditor within the meaning of Section 5 sub-section 20 of the Code. From the aforesaid material on record petitioner is able to establish that there exists debt as well as occurrence of default and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force - it is evident that the corporate debtor has committed default in payment of operational debt and therefore it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code. The petition admitted - moratorium declared.

Summary

Issues involved:
Petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 for operational debt.

Analysis:
1. Operational Debt Claim: The petitioner, an operational creditor, filed a petition under Section 9 of The Insolvency and Bankruptcy Code, 2016, claiming that the respondent owed a total sum of ?10,05,832 along with interest towards the supply of HDPE Woven fabrics. The respondent, a private limited company, denied the debt and raised objections.

2. Submission of Documents: The petitioner submitted various documents to support the claim, including invoices, GST registration certificate, ledger, demand notice, bank statement, and more. The respondent failed to provide documentary proof to counter the claim effectively.

3. Dispute and Admission: The respondent's objections were deemed vague and baseless, lacking documentary evidence. The respondent admitted the debt partially but failed to substantiate claims of offsetting dues against another company. The lack of evidence led to the conclusion that the dispute raised was an afterthought.

4. Judicial Findings: The Adjudicating Authority found the petition to be within the limitation period, with no denial of the operational debt from the corporate debtor's side. The documents presented by the operational creditor established the debt and default on the part of the corporate debtor.

5. Compliance with Legal Requirements: The judgment referred to the case law of Mobilox Innovative Private Limited vs. Kirusa Software Private Limited to determine the presence of operational debt, due payment, and absence of disputes. It was concluded that the operational debt was due, fulfilling the requirements of the Insolvency & Bankruptcy Code.

6. Admission and Moratorium: The Adjudicating Authority admitted the petition, declared a moratorium, and directed the Interim Resolution Professional to make a public announcement for the initiation of Corporate Insolvency Process. The moratorium prohibited various actions against the corporate debtor and ensured the continuity of essential services.

7. Appointment of Interim Resolution Professional: The Authority appointed an Interim Resolution Professional due to the lack of proposal from the operational creditor. The order of moratorium was to remain in effect until the completion of the corporate insolvency resolution process.

8. Communication and Compliance: The order was communicated to the relevant parties, including the applicant, Corporate Debtor, Registrar of Companies, and the appointed Interim Resolution Professional. The Registrar of Companies was informed to refrain from initiating proceedings to strike off the name of the respondent company, considering the ongoing insolvency resolution process.