2022 (7) TMI 100 - 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 - The transactions between the parties giving rise to this operational debt have not been denied or disputed. The only averment in the reply affidavit is that the Corporate Debtor was negotiating with the Operational Creditor for returning of unused lining cloths, which was in good condition and a request to appropriate the value of the returned goods against the claim of the principal amount of Rs.5,33,520/-. The Corporate Debtor has further mentioned that a request was made to the Operational Creditor to waive the interest. The Corporate Debtor has not raised any other defence which could help the Corporate Debtor. On the other hand, the Operational Creditor has been able to prove the operational debt and the default. Even the Demand Notice has been duly served on the Corporate Debtor, which has not been responded to giving rise to the presumption that the amount claimed by the Operational Creditor is acknowledged and admitted by the Corporate Debtor. It further indicates and tentamounts to the inability and incapability of the Corporate Debtor to pay off its outstanding operational debt to the Operational Creditor. Application admitted - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP).
2. Default in payment by the Corporate Debtor.
3. Admissibility of the Operational Creditor's claim.
4. Appointment of Interim Resolution Professional (IRP).
5. Declaration of moratorium.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by the Operational Creditor, seeking initiation of CIRP against the Corporate Debtor. The Operational Creditor supplied fabrics based on purchase orders from the Corporate Debtor, who failed to make the agreed payments within 60 days.

2. Default in payment by the Corporate Debtor:
The Operational Creditor provided evidence of unpaid invoices and challans, reminders sent to the Corporate Debtor, and ledger statements reflecting the outstanding amount of Rs. 6,33,520/-. Despite part payments, a balance remained unpaid, and the Corporate Debtor acknowledged the debt but failed to settle it.

3. Admissibility of the Operational Creditor's claim:
The Corporate Debtor's reply included negotiations for returning unused lining cloths and a request to waive the interest. However, the Operational Creditor denied these claims, stating that only goods worth Rs. 99,987/- were returned post-application, reducing the claim to Rs. 5,33,533/-. The Corporate Debtor's admission of the debt and lack of plausible defense led to the acceptance of the Operational Creditor's claim.

4. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Pratap Mukherjee as the IRP, as the Operational Creditor did not propose any name. The IRP was tasked with ascertaining the particulars of creditors, convening a Committee of Creditors, and evolving a resolution plan within 105 days.

5. Declaration of moratorium:
A moratorium was declared as per Sections 13 and 15 of the Insolvency & Bankruptcy Code, 2016, prohibiting:
a) Institution or continuation of suits or proceedings against the Corporate Debtor.
b) Transfer, encumbrance, or disposal of the Corporate Debtor's assets.
c) Actions to foreclose or enforce security interests.
d) Recovery of property by owners or lessors.

The moratorium is effective from the date of admission till the completion of the CIRP, ceasing upon approval of a resolution plan or liquidation order.

Conclusion:
The Tribunal admitted the petition for initiating CIRP against the Corporate Debtor, declared a moratorium, and appointed an IRP. The Operational Creditor was directed to deposit Rs. 1,00,000/- with the IRP for preliminary expenses. The Registry was instructed to communicate the order to all concerned parties, with the matter listed for a progress report on 10/08/2022.

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