2018 (2) TMI 1739 - AT - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process against the Corporate Debtor for its inability to pay its debt - Held that - There is clear acknowledgment of having received the amount of ₹ 40 lakhs. As per the agreement, the financial creditor had the option of seeking its return after 1 year along with interest @ 27% per annum. This is further substantiated with the issuance of two cheques payable on expiry of a year, for ₹ 40 lakhs as the principal and ₹ 10.8 lakhs as the interest thereon. The Corporate Debtor never raised this feeble ground to repudiate the liability when demands were made on them time and again. This Bench is satisfied that a Financial Debt is due and payable by the Corporate Debtor. Their inability to pay the same entitles the Financial Creditor to seek insolvency resolution process against the Corporate Debtor. The Petition is therefore Admitted.

Summary

Issues:
- Petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by a Financial Creditor for initiation of Corporate Insolvency Resolution Process against a Corporate Debtor.
- Dispute regarding the payment of debt related to the booking of flats in a real estate project.
- Corporate Debtor's denial of receiving the amount and the Financial Creditor's claim of acknowledgment and non-payment.
- Decision on the admission of the petition and appointment of an Interim Resolution Professional (IRP).

Analysis:
1. The petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by a Financial Creditor seeking the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor due to its inability to pay the debt. The Financial Creditor had booked two flats in a real estate project and claimed that the Corporate Debtor failed to repay the amount as per the agreement.

2. The dispute revolved around the booking of two flats by the Financial Creditor in the Corporate Debtor's real estate project. The Financial Creditor had paid a substantial amount towards the flats and claimed that the Corporate Debtor did not have clear title to the land or necessary approvals for the project development, leading to financial uncertainties.

3. The Corporate Debtor denied receiving the payment and argued that since the cheques were not presented, the cause of action did not arise, and no financial debt could be claimed against them. However, the documents on record clearly showed acknowledgment of the payment by the Corporate Debtor, along with the terms of repayment and interest as per the agreement.

4. The Tribunal found the Corporate Debtor's arguments to be unsubstantiated and admitted the petition, ruling in favor of the Financial Creditor. The Bench concluded that a Financial Debt was due and payable by the Corporate Debtor, allowing the Financial Creditor to proceed with the insolvency resolution process. An Interim Resolution Professional (IRP) was appointed to oversee the resolution process and ensure compliance with the statutory requirements under the Code.

This detailed analysis highlights the key legal issues, arguments presented by both parties, and the Tribunal's decision to admit the petition and appoint an IRP for further proceedings in the Corporate Insolvency Resolution Process.