2021 (9) TMI 633 - 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 - service of demand notice - HELD THAT - The Petitioner raised invoices aggregative of ₹ 9,11,190/- to Corporate Debtor and the Corporate Debtor made a payment of ₹ 2,97,676/- and hence the outstanding amount of ₹ 6,91,514/- remain payable by the Corporate Debtor. The said invoice were to be paid on immediate basis and contain interest clause wherein the Petitioner could claim interest @ 24% in case delayed payment. Hence an amount of ₹ 3,52,953.91/- towards interest was claimed. The total amount outstanding of ₹ 10,45,467.90/-. The debt became due on 09.01.2018. The Petitioner has issued demand notice under section 8 claiming entire amount due and the Corporate Debtor replied to said demand notice stating that they were unable to pay the monies and were facing financial distress. The Corporate Debtor filed reply and sought time of 12 to 15 months to pay the outstanding balance. Therefore, in view of the facts of the present case which clearly demonstrate the debt which was due for payment under the invoices raised by the Petitioner and the admission of liability by the Corporate Debtor and express declaration of inability of non-payment due to financial crisis, this petition is admitted. The application filed by the Petitioner is on proper Form 5, as prescribed under the Adjudicating Authority Rules and is complete - Application admitted - moratorium declared.

Issues:
1. Application filed by Operational Creditor for initiating Corporate Insolvency Resolution Process under section 9 of Insolvency & Bankruptcy Code, 2016.
2. Dispute regarding outstanding payment between Operational Creditor and Corporate Debtor.
3. Claim of interest on outstanding amount by Operational Creditor.
4. Financial distress faced by Corporate Debtor and request for time to repay outstanding dues.
5. Appointment of Interim Resolution Professional and declaration of moratorium.

Issue 1: Application filed by Operational Creditor for initiating Corporate Insolvency Resolution Process under section 9 of Insolvency & Bankruptcy Code, 2016:
The application CP(IB)1332/MB/2020 was filed by Supershine Abs Platers Private Limited, an Operational Creditor, invoking section 9 of the Insolvency & Bankruptcy Code against Opal Luxury Time Products Limited, the Corporate Debtor, for initiating the Corporate Insolvency Resolution Process. The Operational Creditor furnished Form No. 5 under Rule 6 of the Adjudicating Authority Rules, 2016, establishing the capacity of "Operational Creditor" and the default amount of ?10,45,467/-, including principal sum and interest.

Issue 2: Dispute regarding outstanding payment between Operational Creditor and Corporate Debtor:
The Operational Creditor supplied goods to the Corporate Debtor based on orders placed during a specific period, resulting in outstanding invoices totaling ?9,11,190/-. Despite partial payment by the Corporate Debtor, an amount of ?6,92,514/- remained unpaid. The Corporate Debtor acknowledged the outstanding balance, citing financial stress and seeking time for payment due to financial difficulties faced by the company.

Issue 3: Claim of interest on outstanding amount by Operational Creditor:
The Operational Creditor claimed interest @ 24% on the outstanding amount as per the invoices raised, leading to a total outstanding of ?10,45,467.90. The Corporate Debtor contested the interest claim, stating it was a business deal and not a money lending transaction, and requested time for repayment due to financial constraints exacerbated by the COVID-19 pandemic.

Issue 4: Financial distress faced by Corporate Debtor and request for time to repay outstanding dues:
The Corporate Debtor highlighted financial challenges, including the impact of the COVID-19 pandemic on its business, and expressed efforts to secure investments for debt repayment and working capital needs. The Corporate Debtor sought a period of 12 to 15 months to settle the outstanding dues of ?6,92,514/- to the Operational Creditor, emphasizing ongoing discussions with bankers for restructuring or One Time Settlement (OTS) for bank liabilities.

Issue 5: Appointment of Interim Resolution Professional and declaration of moratorium:
The Tribunal admitted the application under Section 9 of the Insolvency & Bankruptcy Code, appointing Mr. Vithal M. Dahake as the Interim Resolution Professional. A moratorium was declared under section 14 of the Code, prohibiting various actions against the Corporate Debtor, ensuring continuity of essential goods or services, and specifying the effect of the moratorium until completion of the insolvency resolution process or approval of the resolution plan. The appointed Interim Resolution Professional was directed to comply with the Code's provisions and provide progress updates to the Tribunal within 30 days of appointment.

This detailed analysis of the judgment reflects the application, submissions, findings, and orders issued by the Tribunal concerning the dispute between the Operational Creditor and the Corporate Debtor, ultimately leading to the initiation of the Corporate Insolvency Resolution Process and the appointment of an Interim Resolution Professional with the declaration of a moratorium to facilitate the resolution of outstanding dues and financial distress faced by the Corporate Debtor.

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