2022 (5) TMI 657 - Tri - 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 - The Corporate Debtor viz. Male Square Retails Pvt. Ltd. is admitted in Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code 2016 - Moratorium declared. Application allowed.

Summary

Issues:
Admission of Corporate Debtor into Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016; Declaration of moratorium under Section 14 of the Code; Appointment of Interim Resolution Professional (IRP) and his duties; Public announcement of initiation of CIRP and submission of claims; Continuation of supply of goods/services to the Corporate Debtor during moratorium period; Payment of advance by Operational Creditor to IRP for smooth conduct of CIRP.

Admission of Corporate Debtor into CIRP:
The National Company Law Tribunal, Ahmedabad Bench admitted the application filed by the Applicant-Operational Creditor, directing the admission of the Corporate Debtor, Male Square Retails Pvt. Ltd., into the Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the Code, prohibiting various actions against the Corporate Debtor, including institution or continuation of suits, transferring or disposing of assets, enforcing security interests, and property recovery by owners or lessors. The moratorium is effective from the date of the order until the completion of the CIRP or approval of a Resolution Plan or liquidation order.

Appointment of IRP and Duties:
Mr. Rahul Nareshbhai Shah was appointed as the Interim Resolution Professional (IRP) to conduct the CIRP. The IRP is mandated to perform functions under Sections 17, 18, 20, and 21 of the Code. All personnel associated with the Corporate Debtor are legally obligated to assist the IRP, and failure to cooperate may result in appropriate orders from the Adjudicating Authority.

Public Announcement and Submission of Claims:
The IRP was directed to make a public announcement of the initiation of the CIRP and call for submission of claims as required by the Code. The supply of goods/services to the Corporate Debtor should not be terminated during the moratorium period, and the IRP must protect the Corporate Debtor's property and manage its operations as a going concern.

Payment of Advance by Operational Creditor:
The Operational Creditor was directed to pay an advance of Rs. 1,00,000 to the IRP for the smooth conduct of the CIRP. The IRP must provide proof of receipt of the amount to the Adjudicating Authority along with the First Progress Report. Further interim funds may be demanded by the IRP as per rules.

This judgment highlights the procedural steps taken by the Tribunal in admitting the Corporate Debtor into the CIRP, declaring a moratorium, appointing an IRP, ensuring public announcement and claims submission, and regulating the supply of goods/services during the moratorium period. The directive for the Operational Creditor to make an advance payment to the IRP underscores the financial obligations involved in the insolvency resolution process.