2019 (3) TMI 1778 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - debt due and payable - existence of default or not - HELD THAT - The Tribunal observes that there is a debt due and payable by the Corporate Debtor and that a default has occurred for which the Corporate Debtor was liable to pay. Therefore, the Applicant Bank has established that the amount in default committed by the Corporate Debtor is a fact and it is supported by the documentary evidence placed before this Adjudicating Authority. In the present case, by not replying to the classification of Corporate Debtor's account into an NPA, sent by the Financial Creditor, and by not filing an affidavit in reply to this petition for contesting its liability, the Corporate Debtor has admitted its liability. Moreover, there is an acknowledgement of the Corporate Debtor for admission of its liability on record. The Corporate Debtor has not placed any material to prove the claims made in its reply notice dated 02.06.2018. As long as there is a Debt and a Default occurred this Bench hereby holds that it is a fit case for admission - Application admitted - moratorium declared.

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code filed by the Financial Creditor against the Corporate Debtor.
2. Default in repayment of debt by the Corporate Debtor.
3. Evidence provided by the Financial Creditor to establish default and debt due.
4. Admission of liability by the Corporate Debtor.
5. Declaration of moratorium and appointment of Interim Resolution Professional.

Analysis:

1. The Applicant, a Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor, stating the total debt granted and the default amount. The Corporate Debtor had availed credit facilities and defaulted on repayment, leading to the application being filed.

2. The Financial Creditor provided evidence of the debt and default through various dates and events, including legal notices, demand notices, and possession notices. The Tribunal acknowledged the material furnished by the Financial Creditor, establishing the debt due and the default by the Corporate Debtor.

3. The Corporate Debtor, in response to legal notices, admitted to availing credit facilities but disputed the correctness of the accounts. However, the Corporate Debtor failed to contest its liability effectively, leading to an admission of liability. The Tribunal found the evidence presented by the Financial Creditor to be sufficient to prove the default committed by the Corporate Debtor.

4. Due to the admission of liability by the Corporate Debtor and the lack of evidence to support its claims, the Tribunal held that the case was fit for admission. A moratorium was declared, prohibiting certain actions against the Corporate Debtor, and an Interim Resolution Professional was appointed to oversee the resolution process in compliance with IBBI regulations.

5. The Tribunal admitted the application and declared a moratorium, appointing an Interim Resolution Professional to manage the Corporate Insolvency Resolution Process. The order of moratorium would remain in effect until the completion of the resolution process or until further orders were passed by the Tribunal, ensuring the protection of the interests of the parties involved in the insolvency proceedings.