2022 (7) TMI 235 - 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 - In the present matter, the Corporate Debtor in his reply has admitted the fact that till mid-2019, all the transactions between the Applicant and the Corporate Debtor were conducted without any disputes or disagreement. And the Corporate Debtor had withheld payments towards the Applicant due to the conditions beyond their control - the dispute raised by the Corporate Debtor herein is only feeble and it is relevant to note that the admission with respect to no dispute or disagreement and also toward the debt of USD 60,000/- pose a reasonable inference that it is an admitted fact that 'debt' and 'default' exists. The Corporate Debtor was in a bad financial position and has failed to pay the debts due towards them. This Tribunal is of the affirm view that there was default on the part of the respondent in pursuance of invoices raised on behalf of the applicant, accordingly, the present application stands admitted in terms of Section 9(5) of the Code and CIRP is hereby ordered to be initiated against the respondent Corporate Debtor, forthwith. Application admitted - moratorium declared.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process based on unpaid operational debt.

Analysis:
1. The applicant, an operational creditor, filed an application seeking initiation of Corporate Insolvency Resolution Process against the respondent company, claiming unpaid invoices dating back to 2016. The applicant detailed the transactions and outstanding amount of USD 3,16,217 after adjustments. The respondent, in its reply, raised objections citing disputes over invoices, cargo withholding, and proposed solutions. The applicant sent a demand notice in December 2020.

2. The respondent admitted transactions without disputes until mid-2019 but claimed payment withholding due to uncontrollable conditions. The Tribunal referred to a Supreme Court judgment emphasizing the need for a genuine dispute for rejecting insolvency applications. The respondent's feeble dispute was noted, and the Tribunal found evidence of debt and default, leading to the admission of the application under Section 9(5) of the Code.

3. The Tribunal appointed an Interim Resolution Professional and directed the applicant to deposit Rs. 2 lakhs for expenses. The moratorium under Section 14(1) of the Code was imposed, with specific provisions applicable during the period. Orders were communicated to relevant parties, and compliance reports were mandated. The Registrar of Companies was also informed for updating records.

This detailed analysis covers the application, responses, legal interpretations, and the Tribunal's decision, ensuring a comprehensive understanding of the judgment's key aspects and implications.