2022 (10) TMI 519 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - Upon perusal of the Application, it is observed that this Tribunal has dismissed the captioned petition vide order dated 03.06.2022. The Applicant had preferred an appeal against the aforesaid order of dismissal of petition passed by this Tribunal before the Hon'ble NCLAT. Vide order dated 08.09.2022, the Hon'ble Appellate Tribunal has set aside the order dated 03.06.2022 with directions to this Tribunal to pass an order of admission and other consequential order. Therefore, this Tribunal, vide order dated 20.09.2022, has restored the captioned petition. The Letter of Intent dated 06.09.2010 was executed between the Operational Creditor and the Corporate Debtor clearly substantiate the Operational Creditor's claim that the Corporate Debtor has defaulted on repayment which is duly admitted by Corporate Debtor. Vide order dated 20.09.2022, the Ld. Counsel for Corporate Debtor has admitted the liability of the Corporate Debtor. Upon appreciation of the documents placed on record to substantiate the claim, this Tribunal admits this petition and initiates CIRP on the Corporate Debtor with immediate effect - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Default in payment by the Corporate Debtor
3. Impact of external factors on payment obligations
4. Appointment of Interim Resolution Professional (IRP)
5. 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 for initiation of CIRP against the Corporate Debtor. The Operational Creditor, a construction company, and the Corporate Debtor, a real estate developer, had entered into various work contracts. Despite the completion of the work by the Operational Creditor, the Corporate Debtor defaulted on payments.

2. Default in payment by the Corporate Debtor:
The Corporate Debtor had awarded civil and structural work contracts to the Operational Creditor, which were completed by 01.10.2015. The final bill was submitted on 07.03.2016. However, a significant portion of the invoiced amount remained unpaid. The parties attempted to resolve the issue, and a settlement agreement was reached on 30.09.2019, where the Corporate Debtor agreed to pay Rs. 11,00,00,000/- in tranches. Despite reminders and notices, the Corporate Debtor failed to honor the payment schedule, leading to the filing of the insolvency petition.

3. Impact of external factors on payment obligations:
The Corporate Debtor cited several external factors for the delay in payment, including the ban on construction activities due to EPCA/NGT orders and the COVID-19 pandemic. These factors led to a halt in the project's construction and a shortage of skilled labor, affecting the Corporate Debtor's ability to generate funds from the project. Despite these challenges, the Corporate Debtor admitted its liability and expressed willingness to pay as per the settlement agreement but requested additional time.

4. Appointment of Interim Resolution Professional (IRP):
The Tribunal, after considering the facts and the arguments, admitted the petition and initiated CIRP against the Corporate Debtor. Mr. Atul Mittal was appointed as the IRP. He was directed to take necessary steps as per Sections 15, 17, and 18 of the Code and file his report within 30 days. The Operational Creditor was instructed to deposit Rs. 2 lakhs to cover initial expenses, which would be reimbursed as part of the CIRP costs.

5. Declaration of moratorium:
A moratorium was declared as per Section 14 of the Code, imposing prohibitions on:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, or disposing of any assets or legal rights of the Corporate Debtor.
- Actions to foreclose, recover, or enforce security interests.
- Recovery of property occupied by the Corporate Debtor.
The moratorium ensures that licenses, permits, and similar grants are not suspended or terminated during the insolvency process, provided there are no defaults in current dues.

Conclusion:
The Tribunal admitted the insolvency petition and initiated CIRP against the Corporate Debtor due to the admitted default in payment. An IRP was appointed, and a moratorium was declared to protect the Corporate Debtor's assets and ensure the continuation of essential services. The Tribunal emphasized the need for cooperation from all parties involved to manage the Corporate Debtor's affairs during the insolvency process.

← Previous Next →