Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2020 (10) TMI Tri This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 538 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - A perusal of the counter/objections filed by the Corporate Debtor shows that the Corporate Debtor has only made allegations as against the Financial Creditor, but has nowhere stated or denied that the amount was not disbursed to the Corporate Debtor. A bare perusal of the documents filed by the Financial Creditor viz. the Loan Agreements, the Demand Promissory Notes, the Letter of Confirmation and the Letter of Renewal limits would manifest the fact that the same are fact borne on record and the Corporate Debtor by simply making an allegation that a financial fraud happened between the parties and without placing on record any concrete evidence to substantiate the same, would not absolve the Corporate Debtor's responsibility to repay the amount to the Financial Creditor - The objections raised by the Corporate Debtor are hypothetical and illusory and it does not warrant any interference by this Tribunal. The plea of the Corporate Debtor that financial fraud took place in the company and as a result of which, this Application should be dismissed, does not appear to be plausible and it cannot be considered as a ground for not initiating the CIRP against the Corporate Debtor. All these, the Tribunal has to see that whether there is a 'financial debt' which is due and whether there is any 'default' on the part of the Corporate Debtor and whether the Application filed by the Financial Creditor is within the period of limitation. For the said reasons, the objections, as raised by the Corporate Debtor are rejected. The Financial Creditor has satisfied this Tribunal that there is a 'financial debt' which is due and payable by the Corporate Debtor and the Corporate Debtor has committed a default in repayment of the loan to the Financial Creditor and the Application filed by the Financial Creditor is also within the period of limitation and the Application filed by the Financial Creditor is complete in all respects. Hence, this Tribunal is perforce required to admit the Application as filed by the Financial Creditor - Application admitted - moratorium declared.
Issues Involved:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Allegations of fraudulent and malicious intent under Section 65 of the IBC, 2016. 3. Pre-existing dispute and financial fraud allegations. 4. Admissibility of documents and evidence. 5. Appointment of Interim Resolution Professional (IRP). 6. Declaration of moratorium under Section 14 of the IBC, 2016. Detailed Analysis: 1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016: The Financial Creditor, a bank, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code-2016) against the Corporate Debtor, M/s. Lakshmi Subbaiaah Tex Private Limited, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application included a demand for the declaration of a moratorium and the appointment of an Interim Resolution Professional (IRP). The Financial Creditor claimed a default amount of ?28,43,33,566.87 as of 30.09.2018, with the Corporate Debtor’s account classified as Non-Performing Asset (NPA) on 31.07.2017. 2. Allegations of Fraudulent and Malicious Intent under Section 65 of the IBC, 2016: The Corporate Debtor objected to the application, arguing it was filed fraudulently and with malicious intent, invoking Section 65 of the IBC, 2016. They claimed the Financial Creditor submitted forged documents and suppressed financial frauds, rendering the application incomplete due to nondisclosure of all information. 3. Pre-existing Dispute and Financial Fraud Allegations: The Corporate Debtor alleged a pre-existing dispute with the Financial Creditor, citing a subrogation suit in the Madurai District Court and a writ petition in the High Court of Madras. They accused the Financial Creditor of committing corporate fraud in connivance with certain individuals and another bank, which they claimed destroyed the functioning of Lakshmi Subbaiaah Tex Pvt. Ltd. 4. Admissibility of Documents and Evidence: The Corporate Debtor pointed out specific documents they claimed were suppressed or forged, including the calculation of amounts, certificates of registration of charge, and bank statements. They also highlighted discrepancies in the letter of extension of mortgage and other documents, arguing these issues should lead to the dismissal of the application. 5. Appointment of Interim Resolution Professional (IRP): The Financial Creditor proposed Mr. Swaminathan Prabhu as the IRP, and the tribunal appointed him to take forward the CIRP process. The IRP was instructed to follow the statutory requirements under Sections 15, 17, and 18 of the I&B Code and file a report within 20 days. 6. Declaration of Moratorium under Section 14 of the IBC, 2016: Upon admitting the application, the tribunal declared a moratorium under Section 14(1) of the IBC, 2016, which included: - Suspension of suits or proceedings against the Corporate Debtor. - Prohibition on transferring or disposing of assets. - Suspension of actions to enforce security interests. - Protection of essential goods and services supply during the moratorium. The moratorium will remain effective until the completion of the CIRP or until an order for liquidation or approval of a resolution plan is passed. Conclusion: The tribunal, after considering the facts and circumstances, admitted the application under Section 7 of the IBC, 2016, and initiated the CIRP against the Corporate Debtor. The objections raised by the Corporate Debtor were found to be hypothetical and illusory, lacking concrete evidence. The tribunal concluded that there was a financial debt and default, and the application was complete and within the limitation period. Consequently, a moratorium was declared, and the IRP was appointed to proceed with the CIRP.
|