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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2020 (5) TMI Tri This

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2020 (5) TMI 129 - Tri - Insolvency and Bankruptcy


Issues Involved:
1. Establishment of financial debt.
2. Default in payment by the corporate debtor.
3. Documentation and evidence of default.
4. Limitation period for filing the application.
5. Definition of financial debt under section 5(8) of the Insolvency and Bankruptcy Code (IBC).

Detailed Analysis:

1. Establishment of Financial Debt:
The applicants, Pramendra Kumar Mittal, Rameshwar Chand Mittal, and Nisha Mittal, claimed that they had provided an unsecured loan amounting to ?1,60,00,000 to the corporate debtor, Desiya Hotel and Resorts P. Ltd. The petitioners filed the application under section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the corporate insolvency resolution process against the corporate debtor due to non-repayment of the loan.

2. Default in Payment by the Corporate Debtor:
The applicants alleged that the corporate debtor defaulted in repaying the loan, with the total amount claimed in default being ?2,43,47,467. Despite sending a notice of repayment on February 18, 2019, which was received by the respondent on February 19, 2019, no amount was repaid, nor was there any response from the corporate debtor.

3. Documentation and Evidence of Default:
The applicants annexed several documents to prove the existence of the financial debt, including the balance-sheet of the corporate debtor for the years 2015-2018 and proof of the legal demand notice. However, the application lacked crucial documents such as the agreement detailing the loan terms, the agreed interest rate, and evidence of the agreed repayment schedule. The tribunal noted that the applicants failed to fill in several columns in Part V of the application, which were crucial for establishing the default.

4. Limitation Period for Filing the Application:
The tribunal observed that the last payments made by the applicants were on December 26, 2014, December 29, 2014, and August 25, 2014. The application was filed on June 27, 2019, which was beyond the three-year limitation period as per Article 137 of the Limitation Act. The tribunal emphasized that the applicants failed to specify the actual date of default or cause of action, leading to the conclusion that the application was barred by the limitation period.

5. Definition of Financial Debt under Section 5(8) of the IBC:
The tribunal examined whether the amount claimed by the applicants qualified as a "financial debt" under section 5(8) of the IBC. It was noted that the applicants did not provide any evidence to show that the loan was disbursed against the consideration for the time value of money, nor did they specify any agreed interest rate. The tribunal concluded that the deposits made by the applicants did not meet the criteria for financial debt as defined under section 5(8) of the IBC.

Conclusion:
The tribunal dismissed the application, stating that the applicants failed to establish the existence of a financial debt, provide necessary documentation, and prove that the application was within the limitation period. The tribunal also held that the claimed amount did not qualify as a financial debt under the IBC, leading to the rejection of the prayer to initiate proceedings under section 7 of the IBC against Desiya Hotel and Resorts P. Ltd.

 

 

 

 

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