2022 (8) TMI 65 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operation al Creditors - existence of debt and dispute or not - time limitation - HELD THAT - The Operational Creditor supplied the goods to the corporate debtor from time to time and raised several invoices in respect of the goods supplied. The Operational Creditor had submitted its last bill dated 11.09.2019 to the Corporate Debtor. Thus, from the facts, it is clear that there is continuous cause of action and period of limitation for filing the present petition commences when the last bill was submitted by the Operational Creditor. The facts clearly establish that both the parties were maintaining a running account in lieu of which invoices were being raised and part payment had been made and as the petition has been filed on 18.01.2020, hence it is well within the limitation period. The Corporate Debtor has contended that there exist preexisting disputes with respect to quality of the product supplied by the Operational Creditor to the Corporate Debtor and enclosed the email dated 04.12.2020 and 05.12.2020 which were sent by the Corporate Debtor to the Operational Creditor in respect of inferior quality of the product of the Operational Creditor - It is observed that both the emails dated 04.12.2020 and 05.02.2020 were sent by the Corporate Debtor after issuance of Demand Notice dated 02.12.2019. The Corporate Debtor has not placed on record any other document to prove that there is pre-existing dispute before the issuance of Demand Notice - there exist no pre-existing dispute between the Operational Creditor and Corporate debtor. After giving careful consideration to the entire matter, hearing the arguments of the learned counsel for the Operational Creditor as well as the Learned Counsel for the Corporate Debtor and upon appreciation of the documents placed on record to substantiate their respective claims, this Adjudicating Authority is of the view that there is an operational debt which is due from the corporate debtor and the corporate debtor has defaulted in making payment of the amount due and along with that, in the absence of any pre-existence of dispute, this tribunal admits this application and initiates CIRP on the Corporate Debtor with immediate effect. Application admitted - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Existence of operational debt and default
3. Pre-existing dispute regarding the quality of goods
4. Authorization of the petition
5. Adherence to procedural requirements and timelines
6. Appointment of Interim Resolution Professional (IRP)
7. Declaration of moratorium

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 "Jayna Traders Private Limited" against the corporate debtor "Calzini Fashions Limited" to initiate CIRP, make a public announcement, call for claims, and declare a moratorium as per Sections 14 and 15 of the Code.

2. Existence of Operational Debt and Default:
The operational creditor supplied yarn to the corporate debtor from 30.03.2019 to 11.09.2019 and raised several invoices. The total claimed debt was Rs. 12,19,124/- including interest, with the default date being 27.10.2019. The petition was filed on 18.01.2020, within the limitation period, as the last bill was submitted on 11.09.2019.

3. Pre-existing Dispute Regarding the Quality of Goods:
The corporate debtor alleged that the goods supplied were of inferior quality, citing emails dated 04.12.2019 and 05.12.2019. However, these communications were post the demand notice dated 02.12.2019. The Supreme Court's ruling in Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. emphasized that disputes must pre-exist before the demand notice. The tribunal found no pre-existing dispute, as no evidence was provided to show disputes before the demand notice.

4. Authorization of the Petition:
The corporate debtor contended that the petition was not filed by a duly authorized person as per the Companies Act, 2013. The operational creditor countered that the signatory was authorized by the Board of Directors on 30.11.2019. The tribunal accepted this authorization.

5. Adherence to Procedural Requirements and Timelines:
The operational creditor complied with mandatory provisions of IBC, 2016. Discrepancies in the corporate debtor's replies were noted, such as inconsistencies in the timeline and nature of disputes. The tribunal found the operational creditor's claims consistent and within procedural requirements.

6. Appointment of Interim Resolution Professional (IRP):
The tribunal appointed Mr. Kailash Chander Jain as the IRP, directing him to take necessary steps under Sections 15, 17, and 18 of the Code and file a report within 30 days. The applicant was directed to deposit Rs. 2 lakhs for immediate expenses, to be accounted for and reimbursed as CIRP costs.

7. Declaration of Moratorium:
A moratorium was declared as per Section 14 of the Code, prohibiting:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transfer, encumbrance, or disposal of the corporate debtor's assets.
- Foreclosure or enforcement of security interests.
- Recovery of property occupied by the corporate debtor.
The tribunal clarified that licenses, permits, and similar grants would not be suspended or terminated due to insolvency, provided current dues were paid. The moratorium does not apply to transactions notified by the Central Government or sureties in contracts of guarantee.

Conclusion:
The tribunal admitted the application, initiating CIRP against the corporate debtor, appointing an IRP, and declaring a moratorium. The corporate debtor's contentions regarding pre-existing disputes and authorization were dismissed, and the operational debt was recognized as due and defaulted.

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