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2018 (4) TMI 601 - Tri - Insolvency and BankruptcyCorporate insolvency resolution process - existence of outstanding debt - Held that - Financial creditors extended financial assistance in the form of Inter Corporate Deposits to the corporate debtor. The corporate debtor has duly acknowledged receipt of such Inter Corporate Deposits which were seen distributed through RTGS in the account of the corporate debtor. The corporate debtor has issued confirmation of accounts and thereby admitted the financial debts to be due and payable to the financial creditors in the case in hand. So also, corporate debtor has admitted the interest amount accrued at the rate 12% per annum on the principal sum. The statement of account also shows that the corporate debtor has deducted TDS. The corporate debtor denied the entire transaction disputing the authenticity of the documents evidently executed and signed by the corporate debtor. The above said factors proves that the attempt of the corporate debtor is an attempt to evade payment which is found liable to pay to the financial creditors. Corporate debtors said attempt is found unsuccessful. Despite demands, reminders made by the financial creditors the corporate debtor has failed to repay the debt outstanding in its name. This petition for initiation of Corporate Insolvency Process under section 7 of the Insolvency & Bankruptcy Code, 2016 is liable to be admitted.
Issues:
1. Application under section 7 of IBC, 2016 for corporate insolvency resolution process. 2. Default in repayment by the corporate debtor. 3. Allegations and defenses presented by the parties. 4. Admissibility of the application under section 7 of IBC. 5. Appointment of Interim Resolution Professional and imposition of moratorium. Issue 1: Application under section 7 of IBC, 2016 for corporate insolvency resolution process The application was filed by the financial creditors against the corporate debtor under section 7 of the Insolvency and Bankruptcy Code, 2016. The financial creditors provided credit facilities to the corporate debtor, and the total debt claimed to be in default amounted to &8377; 56,64,439/- as of 31/8/2017. The applicants sought initiation of corporate insolvency resolution process due to the corporate debtor's failure to make timely payments, citing financial problems. Issue 2: Default in repayment by the corporate debtor The financial creditors extended loans to the corporate debtor, and the total default amount comprised four principal sums. Despite part payments made by the corporate debtor, a significant amount remained outstanding. The corporate debtor failed to repay the debts, leading to the initiation of the insolvency resolution process by the financial creditors. Issue 3: Allegations and defenses presented by the parties The respondent, the corporate debtor, denied the total default amount claimed by the financial creditors, alleging that the interest rates were arbitrary and the claims were exaggerated. The respondent disputed the authenticity of the documents and denied liability for the debt. The financial creditors, in their rejoinder, argued that the corporate debtor failed to show grounds for rejection of the application and had admitted the debt in confirmation of accounts. Issue 4: Admissibility of the application under section 7 of IBC The adjudicating authority found that the financial creditors had complied with the provisions of section 7(3)(c) by providing bank statements and evidence of financial assistance extended to the corporate debtor. The corporate debtor's attempts to dispute the transactions were deemed unsuccessful, and the authority held that the application under section 7 of the IBC was complete and sustainable, leading to the admission of the petition. Issue 5: Appointment of Interim Resolution Professional and imposition of moratorium The authority appointed Mr. Manish Jain as the Interim Resolution Professional, and a moratorium under section 14 of the Insolvency & Bankruptcy Code was imposed. The order specified the restrictions during the moratorium period and highlighted the essential provisions to be followed. The authority directed the necessary public announcement and communication of the order to the relevant parties, setting a date for the submission of a report. This detailed analysis of the judgment provides insights into the legal proceedings, arguments presented by the parties, and the final decision of the adjudicating authority regarding the initiation of the corporate insolvency resolution process.
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