2022 (10) TMI 638 - 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 - defective material - credit note was given for the defective material or not? - HELD THAT - On the Counsel for the Operational Creditor pointing out the credit note and copy of the GSTR-1 the Counsel for the Corporate Debtor infact took time to get instructions with regard to discharging the claim amount. Since, none appeared for the Corporate Debtor and did not raise any objection with regard to the argument made by the Operational Creditor, it has to be considered that the Corporate Debtor does not have anything to say against the contentions of the Counsel for the Operational Creditor. This Company Petition needs to be admitted - Petition admitted - moratorium declared.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor for default in payment.

Analysis:
The petition was filed by the Operational Creditor (OC) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (CD) for default in payment of Rs. 34,53,777/- along with interest. The OC supplied TMT Bars to the CD, and after several reminders and a dishonored cheque, the OC filed the petition. The CD contended that the goods were defective, leading to project cancellation and financial loss. The CD claimed the OC breached the contract, and the non-payment was not willful. The OC refuted these claims, stating that defective goods were replaced promptly, and the CD failed to make payments after accepting the goods.

The CD failed to provide evidence of goods rejection by its clients at the time of delivery, and the OC had already issued a credit note for defective material. Despite claiming to seek settlement, the CD did not cooperate during the proceedings. The OC presented evidence of the credit note, the dishonored cheque, and the lack of objections from the CD. As a result, the Tribunal found in favor of the OC, admitting the Company Petition and initiating the Corporate Insolvency Resolution Process against the CD.

The Tribunal appointed an Interim Resolution Professional to manage the Corporate Debtor's affairs, declared a moratorium, and directed cooperation from the Directors, Promoters, and associated persons. The Registry was instructed to communicate the order to the parties involved for compliance. The decision was based on the lack of evidence supporting the CD's claims, the OC's proactive steps, and the CD's failure to participate effectively in the proceedings.