2021 (8) TMI 154 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Quantum of minimum amount of default - existence of debt and dispute or not - HELD THAT - The Notification regarding the enhancement of minimum amount of default to Rs. one crore for the purpose of Section 4 was issued by the Ministry of Corporate Affair on 24th March, 2020 and the amount defaulted by the Corporate Debtor as well as the filing of captioned petition is much earlier to the coming into effect of notification dated 24th March, 2020. Since any notifications issued by the Government are generally prospective in nature unless specifically expressed, hence the said notification is not applicable to the present case. Furthermore, the debt was acknowledged by the corporate debtor by signing the Settlement agreement dated 29th November 2018 annexed as Annexure A-8 with the petition. Application admitted - moratorium declared.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of IBC, 2016 against a Corporate Debtor for non-payment of dues.

Analysis:
1. The Operational Creditor filed a petition seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for non-payment of dues amounting to ?7,94,014. The Corporate Debtor had failed to pay the outstanding amount despite a settlement agreement being in place.

2. The petitioner provided detailed averments regarding the agreements between the parties, the default in payments by the Corporate Debtor, and the subsequent failed attempts to recover the dues. The Corporate Debtor was given multiple opportunities to respond but failed to appear, leading to an ex-parte proceeding.

3. The petitioner argued that the Corporate Debtor did not dispute the services rendered, and the petition was within the limitation period as it stemmed from an earlier arbitration process and settlement agreement. The Tribunal noted that the debt was acknowledged by the Corporate Debtor through the settlement agreement.

4. The Tribunal considered the notification regarding the minimum default amount for Section 4, stating that it did not apply retroactively to the case. Given the acknowledgment of debt and non-payment by the Corporate Debtor, the Tribunal decided to admit the application and initiate the CIRP.

5. An Insolvency Professional was appointed as the Interim Resolution Professional to manage the Corporate Debtor's affairs. Moratorium was declared, prohibiting various actions against the Corporate Debtor, and essential services were to continue uninterrupted during this period.

6. The IRP was directed to comply with specific provisions of the Code, and the Petitioner was instructed to pay a sum to the IRP for expenses. The operational creditor was directed to inform the IRP about the order for compliance purposes.

In conclusion, the Tribunal found merit in the Operational Creditor's petition due to the Corporate Debtor's non-payment and acknowledgment of debt. The initiation of the CIRP was deemed necessary to resolve the outstanding dues and manage the Corporate Debtor's affairs effectively.