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2018 (1) TMI 1587 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtors failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - The applicant has produced all the required documents for proving that a loan was given to the respondent, bank statement proving the amount given to the respondent, copy of letter issued to the respondent to prove that loan has defaulted by the respondent and that the proposed resolution professional has given written communication that there is no disciplinary proceedings pending against him. So no doubt this application is liable to be admitted. However, respondent being raised contentions that this application is premature and there is suppression of material facts regarding extension of period of loan to March,2018 and that the applicant has no authority to institute an application of this nature let us see whether the said contention raised by the respondent is probable or believable - The applicant has produced copy of board resolution dated 17.11.2017, Annexure- A for proving that applicant Mr. Sanjay Kumar Gupta was authorised to sign on behalf of the applicant company. We do not find any defect in the said document so as to reject it. So it proves that the applicant has got the authority to institute an application of this nature. The applicant being succeeded in proving all the ingredients to be satisfied in an application of this nature this application is liable to be admitted under section 7(5) (a) of l B,Code - Application admitted - moratorium is declared for the purposes referred to under 14 of the IBC Code. List it on 05.02.2017.
Issues:
1. Default in loan payment by the Corporate Debtor 2. Validity of the application filed by the Financial Creditor 3. Authority of the Financial Creditor to initiate insolvency process 4. Allegations of suppression of material facts by the Corporate Debtor 5. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code Issue 1: Default in loan payment by the Corporate Debtor The Financial Creditor filed C.P.(IB) No.695 of 2017 alleging that the Corporate Debtor defaulted on a loan of ?25,00,000. The loan agreement required payment of interest amounting to ?73,973, with supporting documents like postdated cheques and loan confirmation statements. The Corporate Debtor failed to repay the loan even after demand, leading to the cheque being dishonored due to insufficient funds. Issue 2: Validity of the application filed by the Financial Creditor The Financial Creditor presented all necessary documents to prove the loan default, including the loan agreement, bank statements, demand letters, and confirmation statements. The Corporate Debtor raised objections, claiming the application was premature and that there was no default. However, the Tribunal found the application complete and admissible under Section 7(5)(a) of the Insolvency and Bankruptcy Code. Issue 3: Authority of the Financial Creditor to initiate insolvency process The Corporate Debtor contested the authority of the Financial Creditor to file the insolvency application, alleging suppression of material facts and lack of authorization. However, the Financial Creditor provided a board resolution authorizing the application, proving the authority to initiate the insolvency process. Issue 4: Allegations of suppression of material facts by the Corporate Debtor The Corporate Debtor argued that the loan period was extended based on mutual understanding until March 2018, and hence, there was no default. However, the Financial Creditor presented evidence contradicting this claim, including demand letters and confirmation statements, which the Tribunal found to be more credible. Issue 5: Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code The Tribunal referred to the Supreme Court's decision in Innoventive Industries Ltd v. ICICI Bank, emphasizing that once a default is established, the application must be admitted. The Tribunal found that all necessary criteria under Section 7(5)(a) were met, leading to the admission of the application and declaration of a moratorium on legal actions against the Corporate Debtor. Overall, the Tribunal admitted the application, appointed an interim resolution professional, and declared a moratorium to facilitate the corporate insolvency resolution process. The order communicated directions to ensure the protection of assets and continuation of essential services during the moratorium period.
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