2017 (11) TMI 1611 - Tri - Insolvency and Bankruptcy

Corporate insolvency procedure - Held that - The Applicant has proved that there is a debt due payable by the Respondent/CD and they have defaulted in making payments even after entering into the Restructuring Agreement and Respondent is responsible to pay. The objections raised by Counsel for the Respondent are not valid ground for rejection of the instant petition. Further, the case laws referred by the Applicant are supporting the submission that the bonafide mistake can be corrected and therefore the contention of the Respondent is not tenable and the entire case of the Applicant cannot be brushed aside at the threshold itself for a simple bonafide and curable mistake. In these circumstances the present name of the applicant is amended as prayed. Therefore, in view of the above the instant petition is admitted and order commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within 180 days, reckoning from the day this order is passed.

Summary

Issues:
Company petition under section 7 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor. Dispute over the maintainability of the petition due to a purported defect in the filing entity. Adjudication on the existence of debt and default by the Corporate Debtor. Application for rectification of the alleged defect in the filing entity. Appointment of an Interim Resolution Professional (IRP) and declaration of moratorium.

Analysis:
The judgment by the National Company Law Tribunal, Chennai, involved a company petition filed by Edelweiss Asset Reconstruction Company Limited acting as Trustee against Frontline Printers Private Limited under section 7 of the Insolvency and Bankruptcy Code, 2016. The petitioner claimed a debt of ?61,09,26,925, including interest, against the Corporate Debtor, asserting commercial insolvency due to non-payment. The Respondent objected, arguing the petition was not maintainable as it was filed by a wrong entity and citing a previous dismissal of a related matter by the Debt Recovery Tribunal. The Applicant sought to rectify the alleged defect, relying on legal precedents allowing for amendments in such cases. The Tribunal found the debt due and payable by the Respondent, dismissing the objections raised by the Respondent's Counsel and allowing the petition to proceed.

The Tribunal acknowledged the Applicant's submission of relevant charge documents and agreements, supporting the existence of the debt and default by the Respondent. The Respondent's objections were deemed insufficient to reject the petition, with the Tribunal citing legal precedents allowing for correction of bona fide mistakes in filings. Consequently, the Tribunal admitted the petition and ordered the commencement of the Corporate Insolvency Resolution Process within 180 days from the date of the order.

Furthermore, the Tribunal appointed an Interim Resolution Professional proposed by the Applicant to manage the Corporate Debtor and declared a moratorium on certain actions against the Corporate Debtor as per the provisions of the Insolvency and Bankruptcy Code, 2016. The IRP was directed to initiate the required procedures, and the directors and promoters associated with the Corporate Debtor were instructed to cooperate with the IRP. The Tribunal directed the parties to comply with the provisions of the Code and communicate the order accordingly.

In conclusion, the Tribunal disposed of the application, emphasizing the admission of the petition, appointment of the IRP, and enforcement of the moratorium as key outcomes of the judgment.