2019 (2) TMI 1729 - Tri - Insolvency and Bankruptcy

Admissibility of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of a default on the part of the Corporate Debtor or not - HELD THAT - The documentary evidence which is placed on the case file is sufficient in order to ascertain the existence of a default on the part of the Corporate Debtor. Therefore, in the light of the facts and circumstances recorded, and the legal position stated, the Financial Creditors have fulfilled all the requirements of law including the proposal of the name of IRP for appointment. Thus, the Application filed under Section 7 of the I B Code, 2016 stands admitted. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Admission of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Determination of default by the Corporate Debtor.
3. Appointment of Interim Resolution Professional (IRP).
4. Declaration of moratorium.

Detailed Analysis:

1. Admission of the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The application CP/1252/IB/2018 was filed by the Financial Creditors under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Dharani Developers Private Limited. The Financial Creditors sought the admission of the application, declaration of moratorium, and appointment of an Interim Resolution Professional (IRP).

2. Determination of Default by the Corporate Debtor:
The Financial Creditors claimed an outstanding amount of ?1,10,57,882/- along with interest at 24% per annum. They entered into a Construction Agreement and Sale Agreement with the Corporate Debtor for purchasing a flat in the project 'PGP Oaks'. Despite making substantial payments totaling ?72,23,380/-, the Corporate Debtor failed to complete and deliver the flat as per the agreed timelines. The Corporate Debtor's failure to respond to multiple settlement opportunities and their inability to provide progress on the construction led to the conclusion that there was a default on their part.

3. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Ms. Rajashree Santhanam as the IRP, as proposed by the Financial Creditors. The IRP was directed to take charge of the Corporate Debtor's management immediately, make a public announcement within three days, and call for submissions of claims as prescribed.

4. Declaration of Moratorium:
A moratorium was declared, effective from the date of the order until the completion of the CIRP. The moratorium prohibits:
- The institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, alienating, or disposing of any assets of the Corporate Debtor.
- Actions to foreclose, recover, or enforce any security interest created by the Corporate Debtor.
- The recovery of any property by an owner or lessor where such property is occupied by the Corporate Debtor.
The supply of essential goods or services to the Corporate Debtor shall not be terminated or interrupted during the moratorium period.

Conclusion:
The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, and ordered the commencement of the CIRP. The IRP was appointed, and a moratorium was declared to facilitate the resolution process. The Corporate Debtor's default was established based on the documentary evidence and the failure to comply with the terms of the agreements with the Financial Creditors.