2019 (7) TMI 1612 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of dispute or not - HELD THAT - The corporate debtor has fairly admitted that the corporate debtor is not in a position to make the payment of the outstanding debt and prayed to pass an appropriate order. Thus, there is a clear admission of the outstanding debt - 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 creditor has fulfilled all the requirements of law, including the name of the resolution professional for appointment as IRP - Hence, 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 Involved:
Adjudication of C. P. No. 769/IB of 2018 under section 7 of the Insolvency and Bankruptcy Code, 2016 against M/s. Karismaa Foundations P. Ltd.

Analysis:
The financial creditor filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the corporate insolvency resolution process (CIRP) against the corporate debtor. The financial creditor claimed an outstanding amount of ?1,66,20,715 against the corporate debtor. The case revolved around a construction agreement dated November 10, 2014, between the financial creditor and the corporate debtor for the construction of a residential building. The agreement stipulated an advance payment of ?1.15 crores within 30 days of signing, with the balance to be paid in instalments over the construction period. The corporate debtor confirmed receiving an advance of ?1.50 crores and started making interest payments. However, issues arose when a cheque for the balance amount was dishonored, leading to a legal notice under the Negotiable Instruments Act, 1881.

The financial creditor issued a statutory notice for payment, to which the corporate debtor admitted part of the claim but failed to honor the post-dated cheques issued in favor of the financial creditor. During the proceedings, the corporate debtor acknowledged its inability to pay the outstanding debt, leading to a clear admission of default. The tribunal found sufficient documentary evidence to establish the default by the corporate debtor, fulfilling all legal requirements for initiating insolvency proceedings.

The tribunal admitted the application, ordered the commencement of the CIRP, and appointed an interim resolution professional (IRP). Ms. Subramaniam Aneetha was appointed as the IRP, with instructions to take charge of the corporate debtor's management immediately. A moratorium was declared from the date of the order until the completion of the resolution process, prohibiting various actions against the corporate debtor. Essential goods or services supply to the corporate debtor/guarantor was protected during the moratorium period. The IRP was directed to comply with specific sections of the Insolvency and Bankruptcy Code, and the directors and management associated with the corporate debtor were instructed to cooperate with the IRP.

The tribunal directed the financial creditor and the registry to provide a copy of the order to the IRP promptly. The order was pronounced in the presence of counsels for both parties, ensuring compliance with the legal procedures and safeguards outlined in the Insolvency and Bankruptcy Code, 2016.