2021 (6) TMI 485 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor committed a default in payment of its dues - existence of debt and dispute or not - HELD THAT - A perusal of the proceedings over the last one year shows that none has appeared for the Respondent to defend the case made out by the Petitioner u/s. 9 of the Code. It is seen that on many occasions the notices were not served upon the Respondent. Notices issued by this office on the Corporate Debtor and its MD were returned as no one was found at the address. Several attempts were made by the Respondent to serve notices, under directions issued by this office. However on two occasions notices are stated to have been served. While it is noted that the operational debt is owed to the Petitioner Operational Creditor, and the Respondent cannot be allowed to thwart these proceedings by remaining absent, we still consider it necessary to allow time to the Petitioner to place on record all such evidence with regard to service of notice on the key managerial personnel of the respondent company, their being available, the status of the company etc. such that the ordering of CIRP would be a meaningful exercise. Petition disposed off.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of the I&B Code due to default in payment.

Analysis:
The case involved a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by an Operational Creditor against a Corporate Debtor for defaulting on a payment of ?29,73,918. The Operational Creditor sought to initiate the Corporate Insolvency Resolution Process (CIRP) due to the outstanding debt related to renting of cranes. Despite attempts to settle the dues, including issuing dishonored cheques and failed communications, the matter proceeded to legal notices and the current application.

The proceedings spanned multiple dates with challenges in serving notices to the Corporate Debtor, who failed to appear or respond throughout the process. Various attempts were made to contact the Corporate Debtor, including serving notices via email and registered post, which were returned undelivered initially. Eventually, after several attempts, acknowledgment of receipt was obtained from the Corporate Debtor.

During the hearings, the Petitioner's counsel requested more time to present a clear case regarding the availability and service of notices to the key management personnel of the Corporate Debtor. The Tribunal emphasized the importance of ensuring all necessary evidence is on record before initiating CIRP, highlighting the need for clarity on the Corporate Debtor's status and the involvement of key personnel.

Ultimately, the Tribunal disposed of the petition, granting the Petitioner the liberty to revive or file a fresh petition once all relevant details regarding notice service and key personnel's involvement are gathered. The decision to initiate CIRP was deferred until a more comprehensive case could be presented based on the material on record and merits of the situation. No costs were awarded in the judgment.