2017 (5) TMI 1633 - Tri - Insolvency and Bankruptcy

Corporate insolvency procedures - outstanding debt - Held that - This Petition was listed before this Adjudicating Authority on 12.5.2017. This Adjudicating Authority directed the Financial Creditor to issue Notice of hearing. Financial Creditor, in compliance with the directions of this Adjudicating Authority, issued Notice of date of hearing and filed proof of despatch. On 17.5.2017, i.e., on the date of hearing, none remained present on behalf of the Corporate Debtor. The debt due to the Financial Creditor is a 'Financial Debt'. The Petition is complete in all respects. The 'Financial Debt' is defined in sub-section (8) of Section 5 of the Code. In view of the above discussions, this Petition is admitted under Section 7 (5) of the Code. This Adjudicating Authority is also appointing Company Secretary, Shri Nitin Hasmukhlal Parikh, residing at 7th Floor, 737, Fortune Tower, Sayajigunj, Vadodara-390005 (E-mail nitin [email protected]) having Registration No. IBB1/1PA-002/1P-N00058/2016- 17/ 10110 as Interim Resolution Professional under Section 13(I)(b) of the Code.

Summary

Issues:
Petition under Section 7 of The Insolvency and Bankruptcy Code, 2016 seeking reliefs under Section 7(5)(a) and Section 13(1)(b) of the Code.

Analysis:
1. The Petitioner, a Financial Creditor, filed a petition under Section 7 of The Insolvency and Bankruptcy Code, 2016 seeking reliefs under Section 7(5)(a) and Section 13(1)(b) of the Code. The Respondent, a Corporate Debtor, failed to repay the outstanding amount despite multiple reminders from the Petitioner Bank. The Petitioner claimed the outstanding amount to be &8377; 82,04,12,819.41 ps., comprising of the principal amount, interest, and other charges. The Petition was filed on 9.5.2017 before the Adjudicating Authority, and the necessary documents establishing the default were submitted.

2. The Adjudicating Authority reviewed the documents provided by the Petitioner Bank, including the Deed of Hypothecation, Corporate Guarantee, and other relevant agreements. The material on record clearly demonstrated the default by the Respondent Company. The Adjudicating Authority found the claim to be based on equitable mortgage, continuing guarantee, and revival letters, concluding that the Petition was filed within the prescribed time limit.

3. The Adjudicating Authority confirmed the absence of any pending disciplinary proceedings against the proposed Interim Resolution Professional. The Petitioner complied with the directives to issue a notice of hearing, and despite the absence of the Corporate Debtor on the hearing date, the Petition was deemed complete. The debt owed to the Financial Creditor was classified as a 'Financial Debt' as defined in the Code.

4. Subsequently, the Adjudicating Authority admitted the Petition under Section 7(5) of the Code and appointed an Interim Resolution Professional. Following the admission of the application, a moratorium was declared under Section 13(1)(a) of the Code, prohibiting various actions against the Corporate Debtor, including legal proceedings and asset disposal. The order of moratorium was to remain in force until the completion of the Corporate Insolvency Resolution Process, subject to certain provisions.

5. The Adjudicating Authority directed the Petitioner to make a public announcement about the initiation of the Corporate Insolvency Resolution Process as required by the Code. The final order was communicated to the Petitioner Financial Creditor, the Interim Insolvency Resolution Professional, and the Respondent Corporate Debtor, concluding the judgment.

This comprehensive analysis of the judgment highlights the legal proceedings, the grounds for the petition, the establishment of default, the appointment of an Interim Resolution Professional, and the declaration of a moratorium in accordance with the Insolvency and Bankruptcy Code, 2016.