2019 (9) TMI 1306 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of outstanding dues - debt due and payable or not? - section 7 of Insolvency Bankruptcy Code, 2016 - HELD THAT - It is clear that debt aggregating to ₹37crore is due and payable by the Corporate Debtor to the Applicant - The application filed by the financial creditor is on proper Form 1, as prescribed under the Adjudicating Authority Rules and application is complete. Application admitted - moratorium declared.

Summary

Issues involved: Application under Section 7 of Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor.

Analysis:
1. Debt and Default: The Applicant, a financial creditor, filed an application under Section 7 of the I&B Code against the Corporate Debtor for defaulting on an outstanding amount of ?55,75,16,707.33 as of 22.01.2019, including penal interest. The debt of ?37 crore was initially disbursed on 25.02.2006 and was secured by hypothecation of stocks, book debts, and equitable mortgage over fixed assets. The Corporate Debtor admitted the debt in response to a notice under SARFAESI Act, and no objections were raised against the application.

2. Limitation Period: The debt of ?37 crore was sanctioned on 19.09.2014 and the default date was 11.06.2015. The application falls within the limitation period as the debt is secured by an equitable mortgage over immovable property, with a prescribed enforcement period of twelve years from the due date.

3. Documentary Evidence: The Applicant submitted various documents, including an NPA certificate, Commercial Credit Information Report, and a statement of account under the Banker's Book Evidence Act, certifying the outstanding amount. The documents established the default and repayment amount exceeding ?1,00,000, supporting the admission of the application.

4. Application Validity: The application was filed on the prescribed Form 1, complete with necessary details and documentation. The proposed Insolvency Resolution Professional (IRP) was declared suitable with no pending disciplinary proceedings, complying with the I&B Code requirements.

5. Admission and Moratorium: The Tribunal admitted the application under Section 7 of the I&B Code, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. A moratorium was declared under Section 14 of the I&B Code, prohibiting legal actions against the Corporate Debtor and appointing an Interim Resolution Professional to oversee the resolution process.

6. Consequential Directions: The Tribunal issued consequential directions during the moratorium period, ensuring the continuity of essential goods or services to the Corporate Debtor and specifying the effect of the moratorium until the completion of the resolution process or liquidation approval. Public announcement of the insolvency resolution process was mandated, and immediate communication of the order to relevant parties was directed for compliance.