2019 (10) TMI 1343 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - From the details of documents filed by the operational creditor it is clear that the operational creditor has established the existence of debt and default on the part of the corporate debtor. The corporate debtor is absent and has not availed the opportunity to defend the arguments made by the petitioner (operational creditor) - In the above circumstances this Tribunal initiates CIRP on the corporate debtor with immediate effect. Application admitted - moratorium declared. Renotify this case for report of the IRP on 26.11.2019.

Summary

Issues:
Petition seeking to initiate CIRP against the Respondent company for default in payment.

Analysis:
The petition was filed by the operational creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the corporate debtor for an alleged default in settling the amount towards the supply of CRGO electrical steel sheet. The operational creditor provided details of transactions leading to the petition, including advance payments made by the corporate debtor and invoices issued by the operational creditor. The debt arose due to non-payment of the invoices along with interest. A notice under Section 8 of the Insolvency and Bankruptcy Code was sent, followed by a reply from the corporate debtor alleging the notice was time-barred. Despite multiple notices, the corporate debtor did not respond, leading to the matter being proceeded ex parte.

The counsel for the petitioner cited relevant decisions by the High Court and Supreme Court in favor of the petitioner, arguing that the matter was within the period of limitation based on the confirmation of outstanding amounts by the corporate debtor. After hearing the arguments and examining the documents, the Tribunal found that the operational creditor had established the existence of debt and default on the part of the corporate debtor. Since the corporate debtor did not defend the arguments, the Tribunal initiated CIRP against the corporate debtor with immediate effect.

A moratorium under Section 14 of the Code was imposed, preventing the institution of suits, transfer of assets, enforcement of security interests, and recovery of property from the corporate debtor. Essential goods or services supply was not to be interrupted during the moratorium period. An interim resolution professional (IRP) was appointed to oversee the resolution process, and the Applicant was directed to deposit a sum to cover immediate expenses. The IRP was required to file a report within 30 days, and the case was renotified for further proceedings.