2021 (6) TMI 86 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - The corporate debtor has admitted the debt and did not argue the matter during the course of last hearing held on 09.03.2021 - the petitioner has supplied goods to the respondent and the aforesaid chain of events clearly establish that the petitioner is operational creditor. Therefore, in the instant case, the petitioner very well falls within the definition of operational creditor and the amount outstanding is operational debt. The Adjudicating Authority is only required to consider whether there is any default and the debt is due and payable. In the instant case, the applicant has placed on record enough documents evidencing the default and hence, the present application deserves to be admitted - 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 pre-existing dispute regarding the operational debt from the side of the corporate debtor. 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' - 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. Application admitted - moratorium declared.

Summary

Issues:
- Admission of petition under Section 9 of The Insolvency and Bankruptcy Code, 2016.
- Determination of operational debt and default by the corporate debtor.
- Compliance with documentation requirements and absence of pre-existing dispute.
- Declaration of moratorium and appointment of Interim Resolution Professional.

Analysis:
1. Admission of Petition: The petition was filed under Section 9 of The Insolvency and Bankruptcy Code, 2016 by an operational creditor against a corporate debtor. The operational creditor provided detailed information regarding the debt originating from the purchase of machinery, along with supporting documentation such as demand notice, purchase order, sales contract, financial conditions, bills of exchange, and invoices.

2. Operational Debt and Default: The corporate debtor admitted the debt and did not contest the matter during the hearing. The chain of events clearly established the operational creditor's status. The Adjudicating Authority found that the operational debt was due and payable, with no pre-existing dispute from the corporate debtor's side. Sufficient evidence was presented to establish the default in payment by the corporate debtor.

3. Compliance and Dispute Resolution: The application met the necessary requirements, and the Adjudicating Authority confirmed that the operational debt was within the limitation period. The documents provided by the operational creditor proved the existence of the debt and the default on the part of the corporate debtor. The judgment referenced a Supreme Court case to emphasize the conditions for admitting such applications and highlighted the lack of dispute raised by the respondent.

4. Moratorium and Resolution Process: The Adjudicating Authority directed the initiation of the Corporate Insolvency Resolution Process, declaring a moratorium as per Section 13 of the Code. The appointed Interim Resolution Professional was tasked with making a public announcement and managing the resolution process. The moratorium was to remain in effect until the completion of the resolution process or liquidation, with specific restrictions on legal actions against the corporate debtor and asset transactions.

5. Appointment and Communication: The Interim Resolution Professional was appointed, and communication of the order was directed to the relevant parties. Additionally, the Registry was instructed to notify the Registrar of Companies about the corporate insolvency resolution process to prevent any actions that could hinder the resolution or asset realization for stakeholders.

This detailed analysis of the judgment highlights the key legal aspects, findings, and directives issued by the Adjudicating Authority in response to the petition under the Insolvency and Bankruptcy Code.