2020 (4) TMI 309 - 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 - This adjudicating authority is of the considered view that operational debt is due to the Applicant. That service is complete and no dispute has been raised by the respondent. That Applicant is an Operational Creditor within the meaning of sub-section (20) of section 5 of the Code. From the aforesaid material on record petitioner is able to establish that there exists debt as well as occurrence of default - the Application filed by the Applicant on 8th January 2019 is complete in all respect. Application admitted - moratorium declared.

Summary

Issues:
Petition under section 9 of The Insolvency and Bankruptcy Code, 2016 - Operational debt due to non-payment - Existence of dispute - Appointment of Interim Resolution Professional - Declaration of moratorium.

Analysis:
1. The petitioner, an operational creditor, filed a petition under section 9 of The Insolvency and Bankruptcy Code, 2016 against the respondent, a company engaged in textile business. The petitioner supplied goods to the respondent, leading to an outstanding amount of Rs. 3,56,747. Despite reminders and a demand notice, the respondent failed to clear the dues, prompting the petitioner to initiate insolvency proceedings.

2. The respondent, in its affidavit, attributed non-payment to external factors like demonetization and GST, affecting its business operations. However, during the hearing, the respondent admitted the debt, acknowledging their inability to make the payment promptly. The respondent did not dispute the operational debt even after receiving a demand notice.

3. The adjudicating authority analyzed the application and supporting documents, including invoices, delivery challans, and correspondence between the parties. The authority noted that the operational debt was clearly established, and the respondent did not raise any dispute regarding the outstanding amount. Referring to the Innoventive Industries Ltd. v. ICICI Bank Ltd. judgment, the authority affirmed the trigger of insolvency proceedings upon default of a debt exceeding Rs. 1 lakh.

4. The adjudicating authority found the application complete and appointed an Interim Resolution Professional. It declared a moratorium, prohibiting legal actions against the corporate debtor, transferring of assets, and enforcing security interests. The moratorium also ensured the continuity of essential services to the corporate debtor. The order of moratorium would remain in effect until the completion of the Corporate Insolvency Resolution Process or liquidation.

5. The petition was admitted, and the moratorium was declared, with specific directives regarding the continuation of essential services and asset management during the moratorium period. The order concluded the case with no costs imposed and mandated the communication of the order to all relevant parties and the appointed Interim Insolvency Resolution Professional.