2018 (7) TMI 2121 - 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 - No documents in support of disbursement of the alleged loan has been placed on record by the Financial Creditor and he should be ordered to produce the same. However, the Financial Creditor has rebutted the same stating that the documents already placed on record at pages 8, 9, 10, 11, 12 and the copy of the complaint fully substantiate the claim and there is nothing to place on record except the said documents - no plausible explanation has been given by the Counsel for the Corporate Debtor pertaining the documents placed at pages 8, 9, 10, 11 and 12 of the typed set filed with the Application, which are evidencing the advancing of the loan by the Financial Creditor to the Corporate Debtor, and are sufficient in nature to establish the existence of default on the part of the Corporate Debtor in repaying the loan. The Application of the Financial Creditor is complete in all respect - Application admitted - moratorium declared.

Summary

Issues: Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Corporate Debtor for outstanding loan repayment.

The Financial Creditor filed an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, declaring a moratorium, and appointing an Interim Resolution Professional. The Financial Creditor claimed an outstanding amount of ?2,31,85,480, inclusive of interest, against the Corporate Debtor. The Financial Creditor provided documents showing disbursement of loans and communications confirming the liability of the Corporate Debtor for the borrowed amount. The Corporate Debtor allegedly issued a dishonored cheque and admitted to a portion of the debt in a complaint. The Corporate Debtor, however, denied the liability, alleging that signatures were obtained forcibly. The Tribunal noted that documents signed by the Managing Director of the Corporate Debtor prior to the complaint supported the Financial Creditor's claim. The Corporate Debtor failed to provide a plausible explanation for these documents, leading the Tribunal to conclude that a default existed on the part of the Corporate Debtor.

The Tribunal found the Financial Creditor's Application complete and admitted it, ordering the commencement of the Corporate Insolvency Resolution Process. An Interim Resolution Professional was appointed, and a moratorium was declared from the date of the order. The moratorium prohibited various actions against the Corporate Debtor, including legal proceedings and asset transfers. Essential goods or services supply to the Corporate Debtor was protected during the moratorium. The Interim Resolution Professional was directed to comply with specific sections of the Insolvency and Bankruptcy Code and receive cooperation from the Corporate Debtor's Directors and management. The Tribunal disposed of related applications and directed the parties to send a copy of the order to the Interim Resolution Professional for compliance.