2022 (7) TMI 575 - 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 - time limitation - HELD THAT - The petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default surpasses the threshold amount stipulated under section 4(1) of the Code, i.e., Rupees one lakh, at the relevant time. Further, the instant petition is well within the limitation period. The Corporate Debtor has contended that the interest claimed by the Operational Creditor is illegal as it is not mentioned in the purchase order or in the alleged invoices. In this respect, the tax invoice dated 20 February 2018 can be referred to, wherein the provision for interest @ 24% has been mentioned. Further, even if the interest component is excluded from the total claimed amount, the principal amount itself crosses the minimum pecuniary threshold under section 4(1) of the Code. As such, the instant petition is maintainable. The demand notice is in consonance with Rule 5 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016. As such, the Corporate Debtor's contention that the same has not been sent in Form 4 is not maintainable. This Adjudicating Authority is satisfied that the Corporate debtor has defaulted in its payment of dues to the Operational Creditor. Further, demand notice has been served on the Corporate Debtor and affidavit under section 9(3)(b) has been attached to the petition. As such the instant petition is complete in all respects. Application admitted - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Validity of debt and default claimed by the Operational Creditor.
3. Alleged agreement between Corporate Debtor and a third party (Raymond Group) affecting payment obligations.
4. Validity of demand notice and procedural compliance.
5. Jurisdiction and pecuniary threshold under the Code.

Issue-wise 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 to initiate CIRP against the Corporate Debtor. The Tribunal found that the Corporate Debtor is in default of a debt due and payable, and the default amount surpasses the stipulated threshold under section 4(1) of the Code, which was Rupees one lakh at the relevant time. The petition was filed within the limitation period and was complete in all respects.

2. Validity of Debt and Default Claimed by the Operational Creditor:
The Operational Creditor claimed a total debt amount of Rs. 12,97,959/- due from the Corporate Debtor, consisting of a principal amount and an interest component. The Corporate Debtor acknowledged receiving the goods without any dispute and admitted to the pending payment in an email dated 24 May 2019. The Tribunal found this email to be an acknowledgment and admission of the debt by the Corporate Debtor.

3. Alleged Agreement Between Corporate Debtor and Raymond Group:
The Corporate Debtor contended that the payment to the Operational Creditor was contingent upon receiving payment from Raymond Group. However, the Tribunal found no evidence of such an agreement in the emails or the FIR filed by a person claiming to be the Authorized Officer of the Operational Creditor. The Tribunal concluded that the Corporate Debtor's claim was not substantiated and therefore not maintainable.

4. Validity of Demand Notice and Procedural Compliance:
The Corporate Debtor argued that the demand notice was void and illegal due to various procedural defects, including not being signed by the concerned person and not being sent in the correct form. The Tribunal found that the demand notice was in compliance with Rule 5 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016, and therefore, the Corporate Debtor's contention was not maintainable.

5. Jurisdiction and Pecuniary Threshold Under the Code:
The Corporate Debtor argued that the Tribunal lacked pecuniary jurisdiction as the alleged default was less than Rupees One Crore. The Tribunal noted that the petition was filed before the amendment to section 4(1) of the Code, which increased the threshold to Rupees One Crore. At the time of filing, the threshold was Rupees one lakh, and the debt amount exceeded this threshold. Hence, the Tribunal had jurisdiction to adjudicate the matter.

Conclusion:
The Tribunal was satisfied that the Corporate Debtor defaulted in its payment of dues to the Operational Creditor. The petition was admitted, and a moratorium under section 14 of the IBC was declared. Mr. Pankaj Lunawat was appointed as the Interim Resolution Professional (IRP) to carry out the functions as per the Code. The Operational Creditor was directed to deposit a sum of Rs. 2,00,000/- with the IRP for expenses arising out of issuing public notice and inviting claims. The Tribunal ordered the necessary communications and compliance reports to be issued and scheduled a follow-up hearing for reporting progress.

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