2022 (5) TMI 1202 - 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 - HELD THAT - To prove the existence of debt and its default by the Corporate Debtor, the Corporate Debtor, the Operational Creditor relied on certificate of debt and its default issued (from information utility, Annex.- L ) All relevant invoices are produced at Annex.-K. A copy of demand notice served under Section 8 of IBC is also annexed at Annex.- F . It has been delivered to the Corporate Debtor by post. The postal track report is also on record as Annex- G - It is not in dispute the Corporate Debtor did not reply the demand notice. Although, the Corporate Debtor submitted and contended that nothing is due and payable but the record reveals that is has sent an email dated 11.07.2019 to the Operational Creditor admitting that certain money is due and payable. There is sufficient evidence and materials on record to hold that the Corporate Debtor has committed default in paying the operational debt of more than rupees one crore in-spite of receipt of the demand notice - It is also noted that certain orders passed in daily proceedings wherein, the Corporate Debtor made statement and sought time to make that it will settled that the dispute and sought some time to make the payment. Be that as it may, the evidence and material on record has proved that, in-spite of receipt of the demand notice, the Corporate Debtor committed default in paying the operational debt of more than rupees one crore. The Corporate Debtor did not produce defense worth to contest this application. This application is free from defects - application allowed.

Summary

Issues:
Application under Section 9 of I.B. Code for Corporate Insolvency Resolution Process due to default in paying operational debt.

Analysis:
The application was filed by the Operational Creditor against the Corporate Debtor for defaulting on operational debt amounting to Rs. 3,24,12,207. The Operational Creditor had supplied goods to the Corporate Debtor, who failed to make the payment despite admitting the outstanding amount in an email. The Corporate Debtor raised technical defenses, including disputes about the quality of goods supplied and unauthorized notice under Section 8 of the I.B. Code. However, the evidence presented, such as certificates of debt, invoices, and the demand notice, supported the Operational Creditor's claim of default.

The Corporate Debtor contested the application, claiming no amount was due and alleging a pre-existing dispute without providing substantial evidence. Despite previous statements seeking time to settle the dispute, the Corporate Debtor failed to present a strong defense against the default allegations. The notice under Section 8 of the I.B. Code was sent by a validly authorized Insolvency Professional on behalf of the Operational Creditor, strengthening the case for default by the Corporate Debtor.

The Tribunal found sufficient evidence on record to establish the Corporate Debtor's default in paying operational debt exceeding one crore rupees. As a result, the application was allowed, admitting the Corporate Debtor into Corporate Insolvency Resolution Process. The Tribunal declared a moratorium under Section 14 of the I.B. Code, prohibiting various actions against the Corporate Debtor, and appointed an Interim Resolution Professional to oversee the resolution process. The IRP was directed to manage the operations of the Corporate Debtor, protect its assets, and call for submission of claims as required by the Code.

Additionally, the IRP was instructed to make a public announcement of the CIRP initiation, ensuring the continuity of goods/services supply to the Corporate Debtor during the moratorium period. The Operational Creditor was directed to provide an advance amount for the smooth conduct of the resolution process. The Registry was tasked with communicating the order to all relevant parties and uploading it on the website. Ultimately, the application was admitted, and necessary steps were taken to proceed with the Corporate Insolvency Resolution Process.