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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2020 (3) TMI Tri This

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2020 (3) TMI 22 - Tri - Insolvency and Bankruptcy


Issues Involved:
1. Barred by Limitation
2. Pre-existing Dispute
3. Validity of Authority Issued to Chief Manager
4. Denial of Credit Facilities
5. Lack of Credible Evidence

Issue-wise Detailed Analysis:

1. Barred by Limitation:
The respondent argued that the petition is barred by limitation. However, the tribunal found that balance confirmation letters issued by the corporate debtor on various dates from 02.04.2013 to 31.03.2017 acknowledged the debt. These letters, duly stamped and signed, confirmed the outstanding debt, proving the existence of financial debt. Therefore, the application filed on 1st April 2019 was within the limitation period.

2. Pre-existing Dispute:
The respondent claimed a pre-existing dispute between the parties. The tribunal, however, found that the volumes of documents produced by the applicant bank, including the term loan agreement, demand promissory note, undertaking to pay installments, and letters of hypothecation, all bearing the corporate debtor's stamp and signature, indicated no such dispute. The objections raised were deemed illusory and not sustainable.

3. Validity of Authority Issued to Chief Manager:
The respondent questioned the validity of the authority issued to the Chief Manager of the bank. The tribunal reviewed the letter of authority dated 04.08.2018 issued by the General Manager of the applicant bank and found it proper and valid.

4. Denial of Credit Facilities:
The respondent denied availing of credit facilities from the applicant bank. The tribunal dismissed this claim, noting the extensive documentation provided by the bank, including the term loan agreement, demand promissory note, and letters of hypothecation, all signed by the corporate debtor. These documents were sufficient to establish that the credit facilities were indeed availed.

5. Lack of Credible Evidence:
The respondent argued that the applicant had not provided credible evidence. The tribunal found this objection vague and unsustainable. The applicant had submitted comprehensive documentation, including sanction letters, balance confirmations, and statements of accounts, which collectively established the debt and the default by the corporate debtor.

Findings:
The tribunal concluded that the application was complete in all respects and the corporate debtor had committed default in paying the financial debt. The tribunal referenced the Supreme Court judgments in "Innoventive Industries Ltd. v. ICICI Bank" and "Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd.," which clarified that the adjudicating authority needs to be satisfied that a default has occurred based on the evidence provided by the financial creditor.

Order:
The petition was admitted, and a moratorium was declared prohibiting:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transfer, encumbrance, or disposal of any assets or legal rights by the corporate debtor.
- Actions to foreclose, recover, or enforce any security interest.
- Recovery of any property by an owner or lessor.

The supply of essential goods and services to the corporate debtor was directed to continue during the moratorium period. The moratorium would remain effective until the completion of the corporate insolvency resolution process or until a resolution plan is approved or liquidation is ordered.

The tribunal appointed CMA George Samuel as the interim resolution professional and directed communication of the order to all relevant parties. The petition was disposed of with no order as to costs.

 

 

 

 

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