2021 (3) TMI 1350 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - financial creditor (Non-Banking Financial Company) - existence of debt and dispute or not - HELD THAT - It is patent that all requirements of Section 7 of the Code for initiation of Corporate Insolvency Resolution Process by a Financial Creditor stand fulfilled. In that regard, the application is complete as per the requirements of Section 7 (2) of the Code and other conditions prescribed by Rule 4 (1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Hon'ble NCLAT in the case of State Bank of India v. Athena Energy Venture Pvt. Ltd. 2020 (11) TMI 800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI has expressed its disagreement with the view taken earlier in the case of Dr. Vishnu Kumar Agarwal Vs. M/s Piramal Enterprises Ltd. 2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI that CIRP against the corporate guarantor and the borrower cannot commence simultaneously and therefore the rationale in Piramal judgement is no more a precedent. Hence, the ground raised by the respondent that the present petition is not maintainable. In order to allow any application under Section 7 of the Code, the applicant has to proof that the application is maintainable as the applicant is a financial creditor , and the debts claimed in the application come within the purview of financial debt as defined under the Code. If this is applied to the to the case in hand, it can be seen that there is existence of Loan facility of ₹ 16,00,00,000, Disbursal of Loan facility of INR 13,35,00,000/- and existence of Default of ₹ 7,94,47,080/-. Hence, the present petition is complete. A default amounting to lacs of rupees has occurred within the meaning of Section 4 of the Code and the application under sub section 2 of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Thus, the application warrant admission as it is complete in all respects - application admitted - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Validity of claims and objections raised by the Corporate Debtor.
3. Applicability of the Piramal Judgment and its relevance to the present case.
4. Compliance with the requirements of Section 7 of the Insolvency and Bankruptcy Code, 2016.
5. Appointment of Interim Resolution Professional and declaration of moratorium.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Financial Creditor, DMI Finance Private Limited, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to trigger the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/S Abloom Infotech Pvt. Ltd. The application was supported by the claim that a sum of ?29,53,87,663.67 along with interest was due from the Corporate Debtor.

2. Validity of claims and objections raised by the Corporate Debtor:
The Corporate Debtor raised several objections against the claim filed by the Financial Creditor, including:
- The association with the Ninex Group and the financial exposures extended to various companies within the group.
- Repayment of loans by some group companies and the ongoing CIRP of others.
- Allegations of unethical practices and misconduct by the Financial Creditor.
- Disputes regarding an agreement to sell a plot of land and the financial transactions related to it.
- Claims of compensation for breach of contract and the invocation of the "group of companies doctrine."

3. Applicability of the Piramal Judgment and its relevance to the present case:
The Corporate Debtor contended that the present application was not maintainable based on the Piramal Judgment, which held that CIRP against the corporate guarantor and the borrower cannot commence simultaneously. However, the Financial Creditor argued that the Piramal Judgment was no longer a valid precedent, citing the recent judgment in State Bank of India V. Athena Energy Ventures Pvt. Ltd., which disagreed with the earlier view. The Financial Creditor also referenced the Insolvency Law Committee Report of February 2020, which supported the right to simultaneous remedies against both the debtor and the surety.

4. Compliance with the requirements of Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal found that all requirements of Section 7 of the Code for the initiation of CIRP by a Financial Creditor were fulfilled. The application was complete as per Section 7 (2) of the Code and other conditions prescribed by Rule 4 (1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Tribunal noted the existence of a financial debt, the occurrence of a default, and the completeness of the application.

5. Appointment of Interim Resolution Professional and declaration of moratorium:
The Tribunal admitted the petition and appointed Mr. Paraveen Bansal as the Interim Resolution Professional (IRP). In pursuance of Section 13 (2) of the Code, the IRP was directed to make a public announcement regarding the admission of the application. A moratorium was declared in terms of Section 14 of the Code, imposing prohibitions on suits, transfers, encumbrances, and recovery actions against the Corporate Debtor. The Financial Creditor was directed to deposit a sum of ?2 lacs with the IRP to meet expenses, and the IRP was instructed to perform his functions with integrity and honesty.

Conclusion:
The Tribunal concluded that the application by the Financial Creditor was complete and satisfied the requirements under Section 7 of the Insolvency and Bankruptcy Code, 2016. The objections raised by the Corporate Debtor were found to be invalid, and the petition was admitted, leading to the initiation of the Corporate Insolvency Resolution Process against M/S Abloom Infotech Pvt. Ltd.

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