2019 (4) TMI 1771 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in repaying the claim amount together with interest - Section 7 of the Insolvency Bankruptcy Code 2016 - HELD THAT - It is evident on record that it is not the case of the Corporate Debtor that debt is not in existence and default is not in existence. Though this Bench has given time of almost more than three months from the date of filing this Company Application the Corporate Debtor failed to repay the same today the counsel has sought adjournment. As against this argument the Creditor Bank counsel argued that it would be of no use in postponing this matter. This Bench having perused the material available on record it is of the considered view that the Creditor Bank has proved existence of debt and default and has also filed the consent letter given by the Insolvency Professional for being appointed as Interim Resolution Professional we hereby admit this Company Application by appointing Mr. Ashok Kumar Seshadri as Interim Resolution Professional with specified directions - petition admitted - moratorium declared.

Summary

Issues:
1. Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Existence of debt and default by the Corporate Debtor.
3. Appointment of Interim Resolution Professional.
4. Declaration of Moratorium and its implications.
5. Continuation of essential goods or services during the moratorium period.
6. Duration and effect of the moratorium.
7. Public announcement of the corporate insolvency resolution process.
8. Appointment and fee payable to the Interim Resolution Professional.

Issue 1: Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016:
The judgment involves a Company Petition filed by a Creditor Bank seeking initiation of Corporate Insolvency Resolution Process against a Corporate Debtor under Section 7 of the Insolvency & Bankruptcy Code, 2016. The grounds for the petition were the Corporate Debtor's default in repaying the claim amount along with interest, as per the loan agreements.

Issue 2: Existence of debt and default by the Corporate Debtor:
The judgment detailed the loan facilities sanctioned by the Creditor Bank to the Corporate Debtor, the loan agreements executed, and the subsequent default by the Corporate Debtor in repaying the loan amounts. The Creditor Bank provided various documents, including balance confirmations, OTS approval letters, and statements of accounts, to prove the existence of debt and default by the Corporate Debtor.

Issue 3: Appointment of Interim Resolution Professional:
After considering the submissions and evidence presented, the Tribunal admitted the Company Application and appointed an Interim Resolution Professional. Mr. Ashok Kumar Seshadri was appointed as the Interim Resolution Professional with specific directions, including verifying any further payments from the debtor and deducting them from the claim amount of the Creditor Bank.

Issue 4: Declaration of Moratorium and its implications:
The Tribunal declared a moratorium prohibiting various actions against the Corporate Debtor, such as instituting suits, transferring assets, foreclosing security interests, and recovering property. The moratorium also included provisions for the supply of essential goods or services to the Corporate Debtor and specified the duration and effect of the moratorium until the completion of the insolvency resolution process.

Issue 5: Continuation of essential goods or services during the moratorium period:
The judgment emphasized that the supply of essential goods or services to the Corporate Debtor should not be terminated or suspended during the moratorium period, ensuring the continuity of necessary support for the Corporate Debtor's operations.

Issue 6: Duration and effect of the moratorium:
The order of moratorium was set to be in effect from a specified date until the completion of the corporate insolvency resolution process or until the approval of a resolution plan or liquidation order by the Tribunal. This provision outlined the timeline and scope of the moratorium's applicability.

Issue 7: Public announcement of the corporate insolvency resolution process:
The judgment directed the immediate public announcement of the corporate insolvency resolution process as per the statutory requirements, ensuring transparency and compliance with the procedural obligations under the Insolvency & Bankruptcy Code.

Issue 8: Appointment and fee payable to the Interim Resolution Professional:
The Tribunal appointed Mr. Ashok Kumar Seshadri as the Interim Resolution Professional and specified his registration details and responsibilities under the Insolvency & Bankruptcy Code. The judgment also highlighted that the fee payable to the Interim Resolution Professional would be in compliance with the regulations and directions issued by the Insolvency and Bankruptcy Board of India.

In conclusion, the judgment comprehensively addressed the issues related to the initiation of the Corporate Insolvency Resolution Process, the appointment of an Interim Resolution Professional, the declaration of a moratorium, and other essential aspects of the insolvency proceedings in accordance with the provisions of the Insolvency & Bankruptcy Code, 2016.