2019 (5) TMI 1792 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of dues - financial debt or not - Possession of secured properties - time limitation - HELD THAT - Records available shows that the respondent has not cared to reply the notice issued by the applicant. The amount due to the Financial Creditor from the Corporate Debtor is a financial debt. In view of the Judgment of the Hon'ble National Company Law Appellate Tribunal, in case of M/S. rnnoventive Industries Ltd. Vs. ICICI Bank Anr., 2017 (9) TMI 58 - SUPREME COURT , this Adjudicating Authority has to satisfy whether a default has occurred; whether the Application is complete; and whether any disciplinary proceeding is pending against the proposed Insolvency Resolution Professional. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt. As can be seen from the Written Communication of the proposed Insolvency Resolution Process, no disciplinary proceedings are pending against him - In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'financial debt'. There is existence of default and that the application under Section 7(2) of the Code is also complete in all respect. The petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted - Application admitted - moratorium declared.

Summary

Issues Involved:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is complete.
2. Whether the Corporate Debtor committed default in paying the financial debt.
3. Whether there are any disciplinary proceedings pending against the proposed Insolvency Resolution Professional.
4. Whether the moratorium under Section 14 of the Code should be declared.

Issue-wise Detailed Analysis:

1. Completeness of Application under Section 7 of the Code:
The applicant, a financial creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code. The application was furnished in the prescribed Form - 1 of the Rules, and the prescribed fee was paid. The applicant also proposed the name of the Resolution Professional, Shri Premraj Ramratan Laddha, and provided Form 2 of the proposed interim resolution professional, declaring no disciplinary proceedings pending against him. The tribunal found the application complete in all respects and held that the petitioner fulfilled all the requirements of Section 7 of the Code.

2. Default in Paying Financial Debt:
The applicant bank sanctioned cash credit and term loans to the respondent company, which were to be repaid within the stipulated period as per the agreed terms and conditions. The respondent company defaulted on these repayments, resulting in the account becoming non-performing assets as of 30.06.2016. Despite frequent requests, reminders, and notices issued by the bank, the respondent company failed to regularize its cash credit account and repay the dues under the term loan. The applicant bank issued a notice dated 30.05.2018, demanding an amount of ?23,08,33,945/- as on 29.05.2018, informing about the initiation of insolvency proceedings under the Code. The respondent neither made payment nor replied to the notice. The tribunal found that the Corporate Debtor committed default in paying the financial debt to the applicant and acknowledged the debt.

3. Disciplinary Proceedings Against Proposed Insolvency Resolution Professional:
The tribunal reviewed the written communication of the proposed Insolvency Resolution Professional and found no disciplinary proceedings pending against him. The proposed professional, Shri Premraj Ramratan Laddha, had the necessary registration and provided a declaration confirming the absence of any disciplinary actions against him.

4. Declaration of Moratorium under Section 14 of the Code:
Upon satisfying that there was a default, the application was complete, and no disciplinary proceedings were pending against the proposed Insolvency Resolution Professional, the tribunal admitted the petition and declared a moratorium. The moratorium prohibited:
- The institution or continuation of suits or proceedings against the corporate debtor.
- Transferring, encumbering, alienating, or disposing of any assets or legal rights of the corporate debtor.
- Actions to foreclose, recover, or enforce any security interest created by the corporate debtor.
- The recovery of any property by an owner or lessor from the corporate debtor.

The tribunal also directed that the supply of goods and essential services to the Corporate Debtor should not be terminated or interrupted during the moratorium period. The order of moratorium would be effective from the date of receipt of the authenticated copy of the order until the completion of the corporate insolvency resolution process or until a resolution plan is approved or an order for liquidation is passed.

Conclusion:
The tribunal admitted the petition, declared a moratorium, and directed the communication of the order to the applicant, financial creditor, corporate debtor, and the interim insolvency resolution professional. The petition was disposed of with no order as to costs.