2022 (10) TMI 961 - 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 - time limitation - HELD THAT - Upon perusal of the records, it is evident that the amount was disbursed to the Corporate Debtor. The Corporate Debtor has admitted in paragraph 13 of letter dated 24.09.2016 the fact that he has received an amount of Rs.15,00,000/- vide DD No. 751011 drawn on SBBJ Bank. This indicates that the fact that there was a valid disbursal - the Respondent was under an obligation to enter into an Appointment Letter by signing the Retailership Agreement post receipt of security deposit. Further, Clause 3 of letter dated 24.09.2016 stipulates that the security deposit shall be refunded at the end of 7th year. Since the Respondent has neither entered into an agreement nor refunded the deposit, there is a clear default. This application was filed on 05.12.2019 and as submitted by Petitioner the date of default is 05.08.2019. Hence, the application falls within the limitation period of three years - the Respondent has defaulted in the payment of the outstanding debt. The application made by the Petitioner is complete in all respects as required by law. It clearly shows that the Respondent is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC, at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor - Petition admitted - moratorium declared.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process (CIRP) under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) against the Corporate Debtor.

Analysis:
The Company Petition was filed seeking to initiate CIRP against the Corporate Debtor, who had taken a refundable security deposit for providing dealership but failed to enter into an agreement or refund the deposit. The Respondent did not reply to the demand notice, leading to the Petitioner filing the application under Section 9 of the Code. The Respondent failed to appear in multiple hearings, and tactics were employed to delay proceedings. The Adjudicating Authority admitted the application as the Respondent defaulted in payment, and the Petition was complete as per legal requirements.

Findings:
The Tribunal referred to a relevant NCLAT decision clarifying that a security deposit is an operational debt. The amount disbursed to the Corporate Debtor was acknowledged, and the Respondent's failure to enter into an agreement or refund the deposit constituted a clear default. The application was filed within the limitation period, and the Respondent was held to be in default of the outstanding debt. The Adjudicating Authority admitted the Petition, initiating the CIRP against the Corporate Debtor.

Order:
The Tribunal admitted the Company Petition, initiating the CIRP against the Corporate Debtor. A moratorium was declared under section 14 of the IBC, and an Interim Resolution Professional (IRP) was appointed. The management of the Corporate Debtor vested in the IRP during the CIRP period. The Operational Creditor was directed to deposit a sum with the IRP for expenses, and various directions were issued to ensure compliance and communication of the Order.

This detailed analysis summarizes the key aspects of the legal judgment, including the issues involved, findings, and the final order issued by the Tribunal.