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2021 (2) TMI 788 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Business Transfer Agreement entered into between the parties - Operational Creditors - existence of debt and dispute or not - HELD THAT - Under the provisions of this Agreement, it was the obligation of the Respondent to make payment of all liabilities towards the retiral benefits of the employees and the Respondent has failed to perform this liability. Therefore, the Petitioner was compelled to discharge its liability on behalf of the Respondent and therefore, payment was made by the Petitioner to these parties on behalf of the Respondent. After making these payments, the Petitioner demanded these amounts from the Respondent and the Respondent even failed to make payment of these amounts. Also, when demanded by the petitioner, the Respondent has admitted its liability and still failed to make any payment to the Petitioner. Therefore, it is crystal clear that there is debt and default on the part of the Respondent. Operational Creditor or not - HELD THAT - In this matter, the claims pertain to supply of goods and services by third parties and also pertains to the employees dues. Therefore, the same fall within the meaning of the term Operational Debt as defined under the Code. As per the terms of the Business Transfer Agreement, the Respondent was legally under a duty to pay various employees and suppliers of goods and services of which the payment was made by the Petitioner. Therefore, the debt is now transferred and is due and payable to the Petitioner by the Respondent - there remains no doubt that the debt is due and payable and also that the same is admitted by the Respondent itself. It is only now that the Respondent has come with certain defenses and an attempt to show that there is a dispute between the parties. It is observed that this is attempt is nothing but an afterthought and thus, we find no merit in the case of the Respondent. For these reasons, it is a case fit case for admission. Also, the documents submitted by the Petitioner are enough to establish the debt upon the Respondent and hence the defenses made by it cannot be relied. Also, they defaulted in repaying the debt which they themselves have admitted. Also, the amount of debt is much above the minimum required amount of ₹ 1,00,000/-. The debt is also within limitation. The Petitioner has also filed the consent of the proposed Interim Resolution Professional by way of Form-2. Hence, the petition is complete in all respects and fulfills the requisite conditions for admission of a petition under Section 9. Application admitted - moratorium declared.
Issues Involved:
1. Default in payment by the Respondent under the Business Transfer Agreement. 2. Whether the Petitioner qualifies as an Operational Creditor under the Insolvency and Bankruptcy Code. 3. Existence of debt and default. 4. Maintainability of the petition under Section 9 of the Insolvency and Bankruptcy Code. 5. Appointment of Interim Resolution Professional and initiation of Corporate Insolvency Resolution Process (CIRP). Issue-wise Detailed Analysis: 1. Default in Payment by the Respondent: The Petitioner, Clariant Services India Private Limited, filed a petition to initiate CIRP against the Respondent, Italtinto Equipment Private Limited, alleging default in payment under a Business Transfer Agreement dated 04.11.2016. The agreement stipulated that the Respondent would pay INR 83,85,941 as consideration and discharge payments to suppliers and employees. The Respondent failed to pay INR 53,96,672, which included INR 36,66,696 towards supplier payments and INR 17,29,976 towards employee retiral liabilities. 2. Whether the Petitioner Qualifies as an Operational Creditor: The Respondent argued that the Petitioner does not qualify as an Operational Creditor under Section 5(20) of the Insolvency and Bankruptcy Code, as the Petitioner did not supply goods or services directly to the Respondent. However, the Tribunal found that the Petitioner's claims pertain to the supply of goods and services by third parties and employees' dues, thus falling within the definition of "Operational Debt" under Section 5(21) of the Code. The debt was legally transferred to the Petitioner, making them an Operational Creditor. 3. Existence of Debt and Default: The Tribunal confirmed the existence of debt and default, noting that the Respondent admitted its liability in a letter dated 17.03.2017. The Petitioner provided sufficient documentation, including the Business Transfer Agreement and various correspondences, to establish the debt. The Tribunal found no merit in the Respondent's defenses, which were deemed an afterthought to avoid liability. 4. Maintainability of the Petition under Section 9: The Respondent challenged the maintainability of the petition, claiming that the Petitioner was not an Operational Creditor and that the debt did not qualify as Operational Debt. The Tribunal rejected these arguments, confirming that the petition met all requisite conditions under Section 9, including the minimum debt amount and the filing of the consent of the proposed Interim Resolution Professional. 5. Appointment of Interim Resolution Professional and Initiation of CIRP: The Tribunal ordered the initiation of CIRP against the Respondent and appointed Mr. Bhaskar Gopal Shetty as the Interim Resolution Professional. The Petitioner was directed to deposit INR 1 lakh towards the initial CIRP cost. The Tribunal also imposed a moratorium, prohibiting suits, transferring assets, and other actions against the Corporate Debtor during the CIRP period. Order: (a) The petition is allowed, and CIRP is initiated against Italtinto Equipment Private Limited. (b) Mr. Bhaskar Gopal Shetty is appointed as the Interim Resolution Professional. (c) The Petitioner shall deposit INR 1 lakh towards the initial CIRP cost. (d) A moratorium is imposed as per Section 14 of the Insolvency and Bankruptcy Code. (e) The supply of essential goods or services to the Corporate Debtor shall not be terminated during the moratorium. (f) The order of moratorium shall remain effective until the completion of the CIRP or further orders. (g) Public announcement of the CIRP shall be made immediately. (h) The management of the Corporate Debtor will vest in the IRP/RP during the CIRP period. (i) The Registry shall communicate this order to the Registrar of Companies, Mumbai, for updating the Corporate Debtor's Master Data. The petition is allowed, and the Registry is directed to communicate the order to both parties and the IRP immediately.
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