2019 (11) TMI 1369 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - outstanding towards the Corporate-Debtor - HELD THAT - It is noted that three balance-sheets referred by the learned Counsel for the Financial-Creditor clearly demonstrate that the amount claimed is outstanding towards the Corporate-Debtor and there is no proof of repayment as claimed by the learned Counsel for the Corporate-Debtor. The documentary evidence produced by the Financial-Creditor is supported by the accounts statement of the Financial-Creditor. The defence that has been advanced by the learned Counsel for the Corporate-Debtor in manifold does not rebut the evidence with regard to the outstanding amount claimed by the Financial-Creditor. Therefore, the defence that has been raised appears to be hollow, mere bluster and is after thought. In view of it, the defence raised by the Corporate-Debtor stands rejected. The Documentary evidence placed on record by the Financial creditor is sufficient in order to ascertain the default on the part of the Corporate Debtor. Therefore, the Financial-Creditor has fulfilled all the requirements of law including the name proposed for appointment of IRP after obtaining consent in Form-2. Thus, the Application stands admitted. The commencement of the Corporate Insolvency. Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted - moratorium declared.

Summary

Issues: Application under Section 7 of IBC for CIR Process, Moratorium, and IRP appointment

Analysis:
1. The Financial-Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution (CIR) Process, declaration of Moratorium, and appointment of an Insolvency Resolution Professional (IRP). The Financial-Creditor claimed an outstanding amount of ?1,18,24,984/- by the Corporate-Debtor, supported by balance-sheets and bank transaction details.

2. The Corporate-Debtor, in its reply, denied owing any money to the Financial-Creditor, alleging ulterior motives and misconduct on the part of the Financial-Creditor. The Corporate-Debtor presented a defense challenging the claims made by the Financial-Creditor, including references to ledger accounts and past transactions between the parties.

3. The Counsel for the Corporate-Debtor referred to various documents and transactions to contest the claims made by the Financial-Creditor. The Corporate-Debtor argued that certain transactions, including a car purchase, were gifts and not related to the outstanding loan amount. Additionally, the Corporate-Debtor highlighted discrepancies in the interest claimed by the Financial-Creditor and board resolutions regarding interest payments.

4. The Financial-Creditor, in response, relied on the Commercial Documents Evidence Act, 1939, to support the authenticity of the balance-sheets presented as evidence. The Financial-Creditor emphasized the lack of concrete evidence from the Corporate-Debtor to substantiate the repayment claims, leading to a rejection of the defense raised by the Corporate-Debtor.

5. After considering the arguments and evidence presented by both parties, the Tribunal found that the Financial-Creditor had provided sufficient documentary evidence to establish the default by the Corporate-Debtor. The Tribunal ruled in favor of the Financial-Creditor, admitting the application and ordering the commencement of the Corporate Insolvency Resolution Process.

6. The Tribunal appointed an Insolvency Resolution Professional proposed by the Financial-Creditor to take charge of the Corporate-Debtor's management. A moratorium was declared from the date of the order until the completion of the Corporate Insolvency Resolution Process, prohibiting certain actions against the Corporate-Debtor. The IRP was directed to comply with the provisions of the Insolvency and Bankruptcy Code, with cooperation expected from the Corporate-Debtor's directors and management.

7. The Tribunal issued directions for communication of the order to relevant parties and appointed IRP, emphasizing compliance with the Code. The detailed address and contact information of the appointed IRP were provided for immediate communication and action. The order was pronounced in the presence of counsels for both parties, ensuring transparency and legal formalities were followed.