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Judgment
[Per Bench]
This application has been filed by Mr.Kanada Hiren Mahendrabhai, Proprietor of Kanada Hirenkumar M., the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC, 2016) for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor viz. Bansal Infracon Private Limited. The amount of claimed debt in default is Rs.8,20,000/- (Rupees Eight Lakh Twenty Thousand Only) and the date of default is 02.10.2018.
The facts, in brief, are that the Operational Creditor is into the business of supplying unskilled labours for ship breaking activities at various sites on day to day basis, and the Operational Creditor developed the infrastructure of the Corporate Debtor in 2016 and since then the Corporate Debtor has entered into business transactions with the operational Creditor.
It is submitted by the Operational Creditor that he entered into an oral agreement on 01.06.2018 with the Corporate Debtor, to supply unskilled labours for ship breaking activities between 01.06.2018 to 01.03.2019 to the Corporate Debtor on the terms that the payment of first part should be made in advance, i.e., in the beginning of the month and the remaining shall be paid after the completion of the work. The Operational Creditor provided the services and raised invoices time to time. Two invoices dated 02.10.2018 and 02.02.2019 were raised for services provided for a period of 8 months during 01.06.2018 to 31.01.2019, total amounting to Rs.8,20,000/- (Rupees Eight Lac Twenty Thousand).
It is further submitted by the Operational Creditor that demand notice in Form 3 under Section 8(1) of the IBC, 2016 was sent to the Corporate Debtor for the payment of Rs.8,20,000/- (Rupees Eight Lac Twenty Thousand) on 20.03.2019, which was delivered at the registered address of the Corporate Debtor by hand delivery and copy of receipt of the said notice by Corporate Debtor with stamp and signature is on record. The Corporate Debtor neither paid the debt nor replied to the demand notice.
It is submitted by the Operational Creditor that after non- payment of outstanding amount after several reminders, the Operational Creditor filed the present application under section 9 of the Code. The Adjudicating Authority vide order dated 04.09.2019 and 09.10.2019 has given time to the Corporate Debtor to engage Counsel and to file reply/objection if any, thereafter, the Corporate Debtor filed an Affidavit in Reply through its director.
The Corporate Debtor through his Affidavit in Reply submitted that the company is facing financial difficulty and despite several efforts to revive the company, there is no change in the financial position of the company and therefore, the Corporate Debtor is unable to make timely payment towards its debt due to the Operational Creditor, and failed to negotiate & settle the matter with the Operational Creditor.
Heard the Learned Counsel for Operational Creditor and perused the material on record, on this basis it appears that:
A. There is a business relationship between Operational Creditor and Corporate Debtor, and the said services were provided to the Corporate Debtor as per mutual understanding and on the basis of oral agreement. The Corporate Debtor admitted the debt liability stating that the financial position of the company is not sound and therefore it is unable to pay the debt due to the Operational Creditor. The Corporate Debtor accepted and admitted the dues for an amount of Rs.8,20,000/- (Rupees Eight Lac Twenty Thousand). Hence, the claim of the Operational Creditor is accepted & admitted by the Corporate Debtor. The default amount meets the threshold limit as prescribed under Section 4 of the IB Code and is well within the limitation for filing the present application.
B. It is noted that there is no pre existing dispute between Operational Creditor and Corporate Debtor, and no reply was sent by Corporate Debtor against the demand notice under section 8 of IBC, 2016 which was served on Corporate Debtor by hand delivery.
C. In the view of facts, it is clear that Corporate Debtor has defaulted in the payment of its debts. On the basis of the facts the application is otherwise defect free & on record. However as far as amount of debt is concerned, the same would be determined by IP/IRP in the course of CIRP of the Corporate Debtor. Accordingly, we admit this application and order as under:
ORDER
I. The application is admitted and the moratorium is declared for prohibiting all of the following in terms of Section 14(1) of the Code.
a. the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
b. transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
c. any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
d. the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.
II. The order of moratorium shall have effect from the date of this order till the completion of the Corporate Insolvency Resolution Process or until this Adjudicating Authority approves the Resolution Plan under sub-section (1) of the Section 31 or passes an order for liquidation of Corporate Debtor Company under Section 33 of the IBC, 2016, as the case may be.
III. The Operational Creditor has proposed the name of the Interim Resolution Professional(IRP). Therefore, this Adjudicating Authority hereby appoints Mr.Tejas Shah having registration No. IBBI/IPA-001/IP-P00089/2017-2018/10185 to act as an IRP under Section 13(1) (c) of the IBC, 2016.
IV. The IRP shall perform all his functions as contemplated, inter-alia, by Sections 17, 18, 20 & 21 of the Code. It is further made clear that all personnel connected with Corporate Debtor, its Promoter or any other person associated with management of the Corporate Debtor are under legal obligation under Section 19 of the Code extend every assistance and co-operation to the Interim Resolution Professional. Where any personnel of the Corporate Debtor, its Promoter or any other person required to assist or co-operate with IRP, do not assist or Co-operate. IRP is at liberty to make appropriate application to this Adjudicating Authority with a prayer for passing an appropriate order.
V. This Adjudicating Authority directs the IRP to make public announcement of initiation of Corporate Insolvency Resolution Process (CIRP) and call for submission of claims under Section 15 as required by Section 13(1) (b) of the CODE.
VI. It is further directed that the supply of goods/service to the Corporate Debtor Company, if continuing, shall not be terminated or suspended or interrupted during moratorium period.
VII. The IRP shall be under duty to protect and preserve the value of the property of the ‘Corporate Debtor Company’ and manage the operations of the Corporate Debtor Company as a going concern as a part of obligation imposed by Section 20 of the Insolvency & Bankruptcy Code, 2016. The IRP is directed to file First Progress Report within 30 days to this Adjudicating Authority.
VIII. The Registry is directed to communicate a copy of this order to the Operational Creditor, Corporate Debtor and to the Interim Resolution Professional and the concerned Registrar of Companies, after completion of necessary formalities, within seven working days and upload the same on website immediately after pronouncement of the order.
Accordingly, CP(IB) No.383/9/NCLT/AHM/2019 is allowed.