2017 (9) TMI 1937 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - It is established that the Corporate Debtor has committed the default in making the payment of the outstanding debt to the Corporate Debtor along with interest as claimed by the Operational Creditor - Operational Creditor has fulfilled all the requirements of law and has also proposed the name of IRP after obtaining the written consent in Form-2. It is satisfying that Corporate Debtor committed default in making payment of the outstanding debt. Application admitted - moratorium declared.

Summary

Issues: Application under Section 9 of Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor for default in payment.

Analysis:
1. The Operational Creditor filed an Application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor due to default in payment of outstanding debt amounting to Rs. 1,69,36,735/- along with interest at 18% p.a. The Application also requested the appointment of an Interim Resolution Professional (IRP) and declaration of moratorium.

2. The Operational Creditor claimed that the Corporate Debtor failed to make payment for advertisement services provided based on purchase orders and invoices, leading to the outstanding debt. Despite a demand notice and proof of delivery, the Corporate Debtor denied the claim, alleging fraud and forgery by the Operational Creditor. The Corporate Debtor argued that a criminal case related to the debt was pending in court, indicating a dispute between the parties.

3. The Tribunal rejected the Corporate Debtor's argument, stating that the pendency of a criminal case does not constitute a valid dispute under the Insolvency and Bankruptcy Code. The Tribunal found that the Corporate Debtor failed to demonstrate any dispute satisfying the legal criteria, leading to the rejection of the plea.

4. After considering submissions from both parties and reviewing relevant documents, the Tribunal concluded that the Corporate Debtor indeed defaulted in payment of the outstanding debt as claimed by the Operational Creditor. The Tribunal found the Operational Creditor compliant with legal requirements and approved the initiation of Corporate Insolvency Resolution Process.

5. The Tribunal appointed an IRP and declared a moratorium, prohibiting various actions against the Corporate Debtor, including legal proceedings and asset transfers. The IRP was directed to manage the Corporate Debtor immediately and comply with specified provisions of the Insolvency and Bankruptcy Code.

6. The Tribunal ordered the continuation of essential goods or services supply to the Corporate Debtor during the moratorium period and directed cooperation from the Corporate Debtor's directors and management in the resolution process. The Application was disposed of, and instructions were issued to relevant parties for compliance with the Order.

This detailed analysis covers the issues raised in the judgment, outlining the legal proceedings and decisions made by the Tribunal regarding the Application under the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor for default in payment.