2019 (1) TMI 1680 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - default due and payable by the corporate debtor - financial creditor - 'allottee' under a 'real estate project' - existence of debt and dispute or not - HELD THAT - The provisions of Section 7 (2) and Section 7 (5) of IBC have been complied. After a conjoint reading of the aforesaid provision along with Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, it can be concluded that a default has occurred and the application under sub-section 2 of Section 7 is complete. The name of the IRP has been proposed and there are no disciplinary proceedings pending against the proposed Interim Resolution Professional. Petition admitted - moratorium declared.

Summary

Issues involved:
1. Claim under Section 7 of the Insolvency and Bankruptcy Code, 2016 by financial creditor against corporate debtor.
2. Default in payment by the corporate debtor leading to the initiation of Corporate Insolvency Resolution Process.
3. Objections raised by the corporate debtor against the petition.
4. Compliance with the provisions of the Insolvency and Bankruptcy Code for admission of the petition.
5. Appointment of Interim Resolution Professional and declaration of moratorium.

Issue 1: Claim under Section 7 of the Insolvency and Bankruptcy Code, 2016 by financial creditor against corporate debtor:
The petition was filed by the financial creditor claiming default in payment by the corporate debtor, seeking initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016. The financial creditor, being an allottee under a real estate project, detailed the payments made towards an apartment booking, totaling to a specific amount in default, including interest. The petition also proposed the appointment of an Insolvency Professional, fulfilling the requirements of the Code.

Issue 2: Default in payment by the corporate debtor leading to the initiation of Corporate Insolvency Resolution Process:
The corporate debtor contested the petition, arguing against the existence of any default and citing reasons such as force majeure conditions for project delays. The corporate debtor claimed to be in compliance with commitments and projected a future application for an Occupation Certificate. However, the tribunal found the objections unsubstantiated, noting the lapse of the maximum project completion period and absence of the Occupation Certificate, leading to a default situation.

Issue 3: Objections raised by the corporate debtor against the petition:
The corporate debtor raised objections related to project delays attributed to force majeure conditions, including Demonetization and other factors. These objections were refuted by the financial creditor, emphasizing the contractual obligations and lack of evidence supporting the corporate debtor's claims. The tribunal dismissed the objections, considering them as excuses to deny the financial creditor's claim.

Issue 4: Compliance with the provisions of the Insolvency and Bankruptcy Code for admission of the petition:
After hearing arguments from both parties and reviewing relevant provisions of the Insolvency and Bankruptcy Code, the tribunal concluded that the requirements of Section 7 had been met. The tribunal found the default established, the application complete, and the proposed Insolvency Professional suitable, leading to the admission of the petition and the appointment of the Interim Resolution Professional.

Issue 5: Appointment of Interim Resolution Professional and declaration of moratorium:
Following the admission of the petition, the tribunal appointed Mr. Tarun Banga as the Interim Resolution Professional and directed the immediate public announcement of the application's admission. Additionally, a moratorium was declared in accordance with Section 14 of the Code, with exceptions specified for certain transactions and essential supplies to the corporate debtor. Communication of the order to relevant parties was mandated within a specified timeline for compliance.

This detailed analysis covers the key issues addressed in the judgment, outlining the legal proceedings and decisions made by the Tribunal in the case.