2021 (10) TMI 209 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - cheque was dishonored and inspite of repeated requests payment was not made - Operational Creditors - existence of debt and dispute or not - case of Corporate Debtor is that the application is a misuse of legal process as settlement had already been arrived between the parties - time limitation - HELD THAT - The notice was sent to the corporate debtor on the registered address as per the master data which returned on 03.09.2019 with the remark no such person . The notice was also served via email on the mail id used for regular communication between the parties. The copies of proof of delivery and tracking report of the email have been annexed. The corporate debtor did not reply to the said demand notice. Consequently, the applicant filed the present application under section 9 of IBC, 2016 and served the copy of this application via speed post, which was returned with the remark no such person in the address , the applicant also served the corporate debtor via email on the registered email id as per master data, the applicant also served the corporate debtor by hand. The copy of acknowledgment of delivery via email and by hand is annexed along with the service affidavit. As per Form V, the total debt outstanding is ₹ 8,50,000/-. The date of default is 01.07.2019 as per Part IV form V and the present application is filed on 23.10.2019. Hence the application is not time barred and filed within the period of limitation - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The Applicant has filed an affidavit in compliance of section 9(3)(b) affirming that no notice of dispute has been given by the corporate debtor relating to dispute of the unpaid operational debt. The present application is filed in Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w. Section 9 of the code and is complete - application admitted - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Outstanding debt and default by the Corporate Debtor
3. Dishonor of cheque and subsequent legal actions
4. Settlement agreement and its breach
5. Maintainability of the application under Res Judicata and Section 65 of IBC
6. Jurisdiction and timeliness of the application
7. Appointment of Interim Resolution Professional (IRP)
8. Moratorium under Section 14 of IBC

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor. The applicant, authorized by a Special Power of Attorney, aimed to recover an outstanding amount of ?8,99,551/- for the supply of goods.

2. Outstanding Debt and Default by the Corporate Debtor:
The Corporate Debtor placed purchase orders for bronze gate valves between July 2014 and January 2016, for which the applicant supplied materials and raised invoices. Despite repeated requests, the Corporate Debtor failed to clear the outstanding amount, leading to the filing of the application.

3. Dishonor of Cheque and Subsequent Legal Actions:
The Corporate Debtor issued a cheque for ?1,40,997/-, which was dishonored due to insufficient funds. Following this, the applicant filed a criminal complaint under Section 138 of the Negotiable Instruments Act. During mediation, the Corporate Debtor agreed to pay ?8,99,565/- in installments but defaulted after the first payment of ?50,000/-.

4. Settlement Agreement and Its Breach:
A settlement agreement was reached on 16.09.2016, where the Corporate Debtor agreed to pay ?8,99,565/- in 10 monthly installments. However, the Corporate Debtor failed to adhere to this agreement, leading to further legal actions and the filing of the present application under Section 9 of IBC.

5. Maintainability of the Application under Res Judicata and Section 65 of IBC:
The Corporate Debtor argued that the application was barred by Res Judicata, as a similar issue had been adjudicated previously. Additionally, it claimed that the applicant violated Section 65 of IBC by concealing material facts and misusing the legal process. The Tribunal found these defenses unmaintainable, noting that the previous order explicitly stated it should not prejudice the applicant’s rights.

6. Jurisdiction and Timeliness of the Application:
The Tribunal confirmed its jurisdiction over the matter, as the registered office of the Corporate Debtor is in Delhi. The application was filed within the limitation period, with the date of default being 01.07.2019, and the application filed on 23.10.2019.

7. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Kamal Ahuja as the Interim Resolution Professional, subject to the condition that no disciplinary proceedings were pending against him. The applicant was directed to deposit ?2 lacs with the IRP to cover expenses.

8. Moratorium under Section 14 of IBC:
Upon admitting the application, a moratorium was declared under Section 14(1) of IBC, prohibiting certain actions against the Corporate Debtor. The Tribunal also directed the applicant to provide the IRP with a copy of the complete paper book and communicated the order to relevant authorities, including the IBBI and ROC.

Conclusion:
The Tribunal admitted the application for initiating CIRP against the Corporate Debtor, appointed an IRP, and declared a moratorium. The defenses raised by the Corporate Debtor regarding Res Judicata and misuse of legal process were dismissed, and the Tribunal confirmed the occurrence of default and outstanding debt, justifying the initiation of insolvency proceedings.

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