2022 (4) TMI 1161 - 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 - validity of demand notice - copies of the invoices not attached with demand notice - HELD THAT - The corporate debtor has raised objection that the Demand Notice sent by the applicant is defective as copies of invoices were not attached with the Demand Notice. In this regard it is seen that the invoices were duly received by the respondent which is evident from sign and seal of the company on the copies of the invoices. Since the respondent had already knowledge about the invoices the objection is not tenable. Maintainability of application on behalf of sole proprietorship - HELD THAT - The present application has been filed by Shri Rajesh Gupta being sole proprietorship of M/s. Ujjwal Packaging. Apparently the petition has not been filed on behalf of M/s. Ujjwal Packaging rather the same has been filed by Shri Rajesh Gupta. Hence the same is maintainable. Existence of debt and dispute or not - HELD THAT - Apparently the goods were being received till 26th February 2019 and the respondent made part payment on 10th May 2019. The amount due does not pertains to the year 2018 rather the same was due qua subsequent invoices. In this regard reliance can be placed on citation Mobilox Innovative Private Limited Vs. Kirusa Software Private Limited 2017 (9) TMI 1270 - SUPREME COURT where it was held that It is clear therefore that once the Operational creditor has filed an application which is otherwise complete the adjudicating authority must reject the application under Section 9(5)(2(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Hence the dispute must be genuine and vague allegations would not serve the purpose as levelled in the present matter. Although one consignment was defective but the same was prior to 26th February 2019 and the intimation qua defective articles was sent on December 2018. The said issue was already stand resolved between the parties. Accordingly after that the respondent kept on placing orders and also received the goods. Even part payment was made on 10th May 2019. Therefore it could not be said that there was any pre-existing dispute between the parties. This Tribunal is of affirm view that the payment with respect to invoices raised on behalf of petitioner were not made by the respondent accordingly the present petition stands admitted - Petition admitted - moratorium declared.

Summary

Issues:
1. Maintainability of the application filed by legal representatives after the death of the applicant.
2. Validity of the Demand Notice and objections raised by the respondent.
3. Existence of a pre-existing dispute between the parties.
4. Appointment of Insolvency Resolution Professional and deposit requirement.

Issue 1: Maintainability of the application filed by legal representatives after the death of the applicant:

The application was filed by legal representatives seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The respondent objected to the maintainability of the application, arguing that since the sole proprietor had passed away, the application was not valid. However, the Tribunal ruled that the application filed by legal heirs after the death of the applicant was maintainable. The Tribunal referred to a relevant judgment and highlighted that an application by legal heirs was allowed by the Tribunal previously, which was not challenged, thus upholding the maintainability of the current application.

Issue 2: Validity of the Demand Notice and objections raised by the respondent:

The respondent raised objections regarding the Demand Notice, alleging defects such as the absence of annexed invoices and a specific date of default. However, the applicant defended these objections by stating that the respondent had knowledge of the invoices as evidenced by receipt acknowledgment. The Tribunal found the objections regarding the Demand Notice to be untenable based on the evidence presented.

Issue 3: Existence of a pre-existing dispute between the parties:

The respondent claimed a pre-existing dispute based on alleged defects in goods supplied by the applicant and lack of rectification. The Tribunal analyzed the timeline of transactions and payments, concluding that the dispute was resolved before subsequent orders were placed and goods received. The Tribunal emphasized the need for a genuine dispute and rejected the contention of a pre-existing dispute, noting that the issue raised by the respondent was resolved between the parties.

Issue 4: Appointment of Insolvency Resolution Professional and deposit requirement:

The Tribunal approved the appointment of an Insolvency Resolution Professional proposed by the applicant. It directed the applicant to deposit a specified amount with the Interim Resolution Professional to cover expenses. Additionally, the Tribunal invoked the moratorium period as per the provisions of the Insolvency and Bankruptcy Code, 2016, and outlined the necessary communication and compliance steps to be taken by the parties involved.

This detailed analysis of the judgment addresses the key issues involved in the case, providing a comprehensive understanding of the Tribunal's decision and reasoning.