2019 (11) TMI 1472 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make the repaymnet of its dues - Operational Debt - existence of debt and dispute or not - service of demand notice - HELD THAT - As a statutory requirement under Section 9(3)(b) of the Code an affidavit dated 08.05.2019 (Annexure-IV of the petition) has been placed by the operational creditor stating that despite service of the demand notice dated 25.03.2019 no reply or notice of dispute has been received and has not paid the operational debt referred to in this petition as unpaid. We have held above that the demand notice in Form No. 3 was properly delivered by the Operational Creditor and no pre-existing dispute is proved. Whether the operational debt was disputed by the corporate debtor? - HELD THAT - The corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. The applicant-operational creditor states that from the abovementioned fact it is clear that the liability of the respondent-corporate debtor is undisputed. Accordingly the petitioner proved the debt and the default which is more than Rs. 1 lac by the respondent-corporate debtor. The petition for initiation of the CIRP process in the case of the Corporate Debtor M/s. Shristi Plywood Pvt. Ltd. is admitted - moratorium declared.

Summary

Issues Involved:
1. Proper service of demand notice.
2. Dispute of operational debt.
3. Compliance with Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016.
4. Appointment of Interim Resolution Professional (IRP).
5. Declaration of moratorium.

Issue-wise Detailed Analysis:

1. Proper Service of Demand Notice:
The first issue for consideration was whether the demand notice in Form No. 3 dated 25.03.2019 was properly served. The demand notice was sent to the registered office of the corporate debtor as per the master data. There was no reply to the demand notice by the corporate debtor, indicating proper service.

2. Dispute of Operational Debt:
The next issue was whether the operational debt was disputed by the corporate debtor. The corporate debtor did not file any reply to the demand notice dated 25.03.2019 nor disputed the liability towards the operational creditor. Thus, there was no dispute as to the liability between the corporate debtor and the operational creditor.

3. Compliance with Section 9(5)(i) of the Insolvency and Bankruptcy Code, 2016:
The provisions of Section 9(5)(i) of the Code were examined, which specify conditions under which the Adjudicating Authority shall admit the application. The application was found to be complete, there was no payment of the unpaid operational debt, the invoice or notice for payment was delivered, no notice of dispute was received, and there were no disciplinary proceedings pending against any proposed resolution professional. The Hon'ble Supreme Court's judgment in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited was referred to, emphasizing that the adjudicating authority must reject the application if a notice of dispute is received. However, in this case, no such notice was received, and the operational debt was undisputed.

4. Appointment of Interim Resolution Professional (IRP):
Since the operational creditor did not propose the name of any Resolution Professional, the Tribunal referred to the Board for the recommendation of an insolvency professional. Mr. Ravi Sethia, appearing at Serial No. 35 of the panel approved for NCLT, Chandigarh Bench, was appointed as the Interim Resolution Professional. His credentials were checked, and nothing adverse was found against him. His duties and responsibilities were outlined, including taking control and custody of the corporate debtor's assets, causing a public announcement, constituting a Committee of Creditors, and sending regular progress reports to the Tribunal.

5. Declaration of Moratorium:
A moratorium was declared in terms of sub-section (1) of Section 14 of the Code, which included the institution or continuation of suits against the corporate debtor, transferring or disposing of assets, and recovering property by an owner or lessor. The supply of essential goods or services to the corporate debtor was not to be terminated during the moratorium period. The moratorium would be effective from the date of the order until the completion of the corporate insolvency resolution process or until the Tribunal approves a resolution plan or passes an order for liquidation.

Conclusion:
The petition for initiation of the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor was admitted. The moratorium was declared, and Mr. Ravi Sethia was appointed as the Interim Resolution Professional with specific directions. The Tribunal ensured that all statutory requirements were met, and the process was to be conducted in accordance with the Code and relevant regulations.