2019 (1) TMI 1767 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - The Petitioner submitted that the loan was shown in the balance sheet of the Corporate Debtor which is an acknowledgement of liability and hence the debt is not barred by limitation. However, the Corporate Debtor has not disputed the fact that the loan was shown as a liability in the balance sheet of the Corporate Debtor. When the liability is shown in the balance sheet that is a clear acknowledgement of debt by the Corporate Debtor - There are umpteen numbers of judgements to say that the debt shown in the balance sheet is an acknowledgement of liability. This adjudicating authority having satisfied with the fact that the Corporate Debtor defaulted in making payment towards the liability to the petitioner, the petition deserves to be admitted. Application admitted - moratorium declared.

Summary

Issues:
- Corporate Insolvency Resolution Process sought by TJSB Sahakari Bank Ltd against M/s. Unimetal Castings Ltd for default in loan repayment under the Insolvency and Bankruptcy Code, 2016.
- Contention raised by the Corporate Debtor regarding the status as a medium enterprise, illegal declaration of NPA, non-due claim, entitlement to request restructuring, and high-handedness in SARFAESI issuance.
- Legal arguments presented by both parties regarding the default, acknowledgment of liability, and limitation period under Article 137 of the Limitation Act.
- Adjudication of the petition by the Tribunal and the decision to admit the petition, appoint an Interim Resolution Professional, impose a moratorium, and issue necessary directions.

Analysis:
1. The Tribunal was approached by TJSB Sahakari Bank Ltd seeking Corporate Insolvency Resolution Process against M/s. Unimetal Castings Ltd due to default in loan repayment amounting to over ?6 crore. The Petitioner provided details of credit facilities sanctioned to the Corporate Debtor by a consortium, along with security documents supporting the loan facilities.
2. The Corporate Debtor contested the petition, claiming medium enterprise status under the MSMED Act, challenging the NPA declaration, disputing the claim amount, and asserting rights for credit facility restructuring. The Tribunal noted that these contentions cannot be considered under Section 7 of the Insolvency and Bankruptcy Code.
3. The Corporate Debtor also raised the issue of limitation under Article 137 of the Limitation Act, arguing that the petition was time-barred. However, the Petitioner argued that the debt acknowledgment in the balance sheet by the Corporate Debtor nullifies the limitation defense, citing legal precedents supporting this position.
4. After considering the arguments and evidence presented, the Tribunal found that the Corporate Debtor had defaulted in loan repayment, leading to the admission of the petition. The Tribunal appointed an Interim Resolution Professional, imposed a moratorium on certain actions, and issued specific directives to manage the insolvency resolution process effectively. The order was communicated to the parties and the appointed professional promptly.

This detailed analysis covers the issues raised, legal arguments presented, and the Tribunal's decision in admitting the petition and initiating the Corporate Insolvency Resolution Process, ensuring compliance with the relevant legal provisions and precedents.