2022 (6) TMI 777 - 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 - On perusal of the documents of the Operational Creditor, the two letters one by Operational Creditor to the Corporate Debtor written on 22nd December, 2017 and the reply thereto dated 30th December, 2017 are the main planks of the case and the third important document i.e. required to be considered is the agreement executed between the Corporate Debtor and ESAB India Limited along with a receipt and memo of consideration whereby a sum of Rs. 2,50,00,000/- has been transferred by the Corporate Debtor to the vendor/land owner ESAB India Limited vide cheque no. 050595 dated 9th March, 2017 (drawn on IDBI Bank). It is clear that once the Corporate Debtor has authorized the Operational Creditor and admittedly confirmed the letter dated 22nd December, 2017 sent by the Operational Creditor, vide letter dated 30th December, 2017 written by the Director of the Corporate Debtor and pursuant thereto admittedly entered into an agreement along with their receipt, duly executed by the land owner after accepting part payment of Rs.2,50,00,000/-, there is hardly anything left to be doubted. The Operational Creditor has duly complied with all the procedural formalities in filing the petition and has filed affidavit under section 9(3)(b), the petition is complete in all respects. Pre-existing dispute - HELD THAT - Even though the Corporate Debtor has tried to convince this Adjudicating Authority as regards some pre-existing disputes and has raised certain frivolous grounds of defence but any of the grounds of defence taken by the Corporate Debtor, is not convincing. Application admitted - moratorium declared.

Issues Involved:
1. Existence of Operational Debt and Default.
2. Validity of Demand Notice.
3. Pre-existing Disputes.
4. Admission of Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis:

1. Existence of Operational Debt and Default:
The Operational Creditor, engaged in real estate consulting, facilitated a transaction between the Corporate Debtor and ESAB India Ltd. An agreement was executed in March 2017, and the Operational Creditor's fee was confirmed at Rs. 1,00,00,000/- plus taxes, payable upon invoice receipt. The invoice dated 31st January 2018, amounting to Rs. 1,18,00,000/- inclusive of GST, was delivered to the Corporate Debtor, with payment due on 2nd March 2018. Despite multiple reminders, the Corporate Debtor failed to pay. The Operational Creditor issued a notice under section 8 of IBC on October 15, 2020, demanding payment within 10 days. The Corporate Debtor denied receiving the invoice and claimed ignorance of the transaction.

2. Validity of Demand Notice:
The Corporate Debtor argued that the demand notice was defective and not in the prescribed form, thus invalid. However, the Operational Creditor maintained that all procedural formalities were duly complied with, including the filing of an affidavit under section 9(3)(b). The tribunal found the petition complete in all respects.

3. Pre-existing Disputes:
The Corporate Debtor contended that there were pre-existing disputes regarding the property, including its classification as agricultural land and issues with obtaining necessary clearances. They also claimed that the Operational Creditor misrepresented the property's status. The Operational Creditor denied these allegations, stating that the scope of their service was limited to executing the agreement for sale. The tribunal found no genuine or pre-existing disputes that could invalidate the claim.

4. Admission of Corporate Insolvency Resolution Process (CIRP):
The tribunal, after considering the documents and arguments, found that the Operational Creditor had a valid claim and that the Corporate Debtor's defenses were frivolous. The tribunal admitted the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, and declared a moratorium as per Sections 13 and 15 of the I & B Code, 2016. An Interim Resolution Professional (IRP) was appointed to initiate the Corporate Insolvency Resolution Process.

Orders:
1. The application for initiating CIRP against the Corporate Debtor is admitted.
2. A moratorium is declared in accordance with Sections 13 and 15 of the I & B Code, 2016.
3. The IRP is to make a public announcement and call for claims submission.
4. The moratorium prohibits suits, asset transfers, foreclosure actions, and property recovery against the Corporate Debtor.
5. Essential goods or services to the Corporate Debtor shall not be interrupted during the moratorium.
6. The moratorium remains effective until the completion of the CIRP or approval of a resolution plan.
7. Mr. Manish Jain is appointed as the IRP, subject to compliance with requisite formalities.
8. The Operational Creditor is directed to deposit Rs. 2,00,000/- with the IRP for preliminary expenses and fees.
9. The registry is directed to communicate the order to all concerned parties.
10. The matter is listed for filing of the progress report on 12/07/2022.

Conclusion:
The tribunal admitted the CIRP application, finding that the Operational Creditor's claim was valid and that the Corporate Debtor's defenses were insufficient to dispute the debt. The process for resolving the Corporate Debtor's insolvency was initiated, with specific directives for the IRP and the moratorium period.

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