2019 (5) TMI 1935 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - definite amount and date of default, available or not - existence of debt and dispute or not - time limitation - HELD THAT - In the present case, as it is not disputed that there is a debt which is more than ₹ 1 Lakh and the Corporate Debtor failed to pay the debt, we hold that the application under Section 7 was maintainable. On 7th December, 2018, it is observed that prima facie there is no merit in the appeal but the counsel for the Appellant informed that the Appellant intends to settle the matter therefore the matter was adjourned time to time. Even after six months as the matter was not settled, the case was heard on merit - Mr. Vipul Ganda, learned counsel for the Appellant initially argued the case and subsequently submitted that Mr. Ashok Oswal is interested to argue the case on merit. Inspite of the fact that the Appellant Mr. Ashok Oswal has appointed the counsel, the Appellant are allowed to address the case on merit of the appeal. Mr. Ashok Oswal wanted to read written argument instead of arguing the case on merit. Nothing specific in his submission transpired. However, he is allowed to file written submissions by 8th May, 2019. The same have been filed on 8th May, 2019 vide Diary No. 11961. The written submission are repetition of the case put up by the Appellant which we have already referred in this Judgment earlier. The appeal is dismissed.

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by UCO Bank against the Corporate Debtor.
2. Declaration of the Corporate Debtor's account as NPA and subsequent filing of application under Section 7 of the I&B Code by UCO Bank.
3. Disputed questions relating to the amount and date of default in the Section 7 petition.
4. Maintainability of the Section 7 application due to multiple recovery proceedings against the Corporate Debtor.
5. Compliance with the requirements of Section 7 of the I&B Code for the application filed by UCO Bank.
6. Adjudicating Authority's consideration of the default and debt amount in the Section 7 application.

Analysis:
1. UCO Bank, as a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor. The Corporate Debtor had availed credit facilities from the bank, and a dispute arose regarding the declaration of the account as NPA, leading to the appeal by a shareholder of the Corporate Debtor.
2. The grievance raised was that the Corporate Debtor disputed the NPA status of its account, citing regular payments till a certain period and a subsequent notice under the SARFAESI Act. Additionally, there were counterclaims and disputes regarding the actions of the bank, which were rejected.
3. The Appellant argued that the Section 7 application was incomplete and wrongly indicated the default date and NPA status. The lack of a definite amount and date of default, along with ongoing recovery proceedings, raised questions on the maintainability of the application.
4. The Adjudicating Authority's failure to consider the disputed debt amount and default date, as well as the absence of compliance with Section 7 requirements, were highlighted by the Appellant's counsel, questioning the validity of the application.
5. Referring to the Supreme Court's judgment on the I&B Code, the Tribunal held that the application under Section 7 was maintainable as there was a debt exceeding the specified threshold and a failure to pay by the Corporate Debtor.
6. Despite attempts to settle the matter, the appeal was dismissed due to lack of merit, with the Tribunal finding no substance in the written submissions filed by the Appellant. The decision was made in consideration of the facts and circumstances of the case.