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2020 (9) TMI 997 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - Financial Debt or not - existence of debt and dispute or not - HELD THAT - It is evident that Petitioner had granted Financial assistance to the Corporate Debtor, the same was disbursed to the Corporate Debtor and there was a default in repayment of the said dues - The nature of debt is a Financial Debt as defined under section 5 (8) of the Code. It has also been established that admittedly there is a Default as defined under section 3 (12) of the Code on the part of the Corporate Debtor. This Bench having been satisfied with the petition filed by the Petitioner which is in compliance of provisions of Section 7 of the Code, admits this Petition declaring moratorium - petition admitted.
Issues:
Setting in motion Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor for default in payment. Analysis: The Company Petition was filed by Bank of India to initiate CIRP against Wadhwa Buildcon LLP for defaulting on a payment of ?27,32,30,721.74, invoking Section 7 of the Insolvency & Bankruptcy Code. The Petitioner had initially sanctioned a Term Loan of ?40.00 Crores which was later reduced to ?27.00 Crores at the request of the Corporate Debtor. Various security documents were executed to secure the facilities sanctioned, as detailed in the petition. The statement of account showed that a sum of ?25,76,50,063.10 was due from the Corporate Debtor, with additional uncharged and penal interest leading to a total default amount of ?27,32,30,722. The Petitioner had issued a notice under section 13(2) of the SARFAESI Act, 2002, classifying the account as a Non-Performing Asset (NPA) and demanding payment. In response, the Corporate Debtor raised several contentions, including offering settlements, selling properties, and facing difficulties due to market conditions like demonetization and GST. However, the Bench observed that there was a clear default in repayment and the debt qualified as a "Financial Debt" under the Code. The Corporate Debtor's admission of the account becoming NPA further supported the Petitioner's case. The Bench referred to a Supreme Court ruling highlighting the process for a financial creditor to trigger CIRP, emphasizing the importance of establishing default and the subsequent admission of the application. Satisfied with the petition's compliance with Section 7 of the Code, the Bench admitted the Petition, declaring a moratorium and appointing an Interim Resolution Professional. The order of moratorium was to be effective until the completion of CIRP, approval of a resolution plan, or liquidation of the Corporate Debtor. The detailed analysis of the petition, responses from both sides, legal provisions, and the Bench's observations culminated in the decision to admit the petition and initiate the CIRP process, ensuring the protection of the interests of the Petitioner and the Corporate Debtor within the framework of the Insolvency & Bankruptcy Code.
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