Gupta Power Infrastructure Ltd. v. Sravanthi Lnfratech (P) Ltd.

INSOLVENCY AND BANKRUPTCY CODE, 2016

--Initiation of corporate insolvency resolution process by operational creditor--Non-repayment of outstanding duesExistence of debt and default--Whether application for initiation of CIRP admissible--Where corporate debtor had neither made payment of operational debt nor had brought existence of dispute to the notice of operational creditor within the period of ten days, and that the conditions prescribed under section 9(1)(a) to (d) were satisfied and no disciplinary proceedings were pending against the proposed Interim Resolution Professional, then, application for initiation of CIRP was to be admitted.--Operational creditor supplied power cables to corporate debtor. Despite repeated demands, corporate debtor failed to make part payment of supplied material. Operational creditor initiated arbitration proceedings under the Micro, Small and Medium Enterprises Development Act, 2016 (MSMEDA) wherein corporate debtor was directed to pay the outstanding amount along with interest. However, despite the direction passed in award, the corporate debtor failed to make payment of the unpaid debt. Thereafter, operational creditor had issued demand notice under section 8(1), but neither payment was made nor the corporate debtor had brought any dispute to the notice of operational creditor within the period of ten days. Therefore, the operational creditor filed application under section 9 for initiation of CIRP against the corporate debtor. Held: Since operational creditor had supplied material to the corporate debtor and due to certain irregularities in the payment made by the corporate debtor, the operational creditor had initiated arbitration proceedings under MSMEDA. Therefore, the corporate debtor had accepted that the debt for materials supplied by the operational creditor was due to them. Further that, the corporate debtor had not brought existence of dispute to the notice of operational creditor within the period of ten days. Further that, all the conditions prescribed under section 9(1)(a) to (d) were satisfied and no disciplinary proceedings were pending against the proposed Interim Resolution Professional as per section 9(5)(e). Hence, the application under section 9 was admitted.