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2020 (2) TMI 1331 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor committed default in paying Financial debt - existence of debt and dispute or not - HELD THAT - Hon ble Appellate Tribunal directed this Adjudicating Authority to admit the Corporate Debtor in CIRP under Section 7 IBC 2016 after giving opportunity to settle the dispute. Accordingly this Authority vide order dated 18.12.2019 directed both State Bank of India and the Corporate Debtor to produce on record as to whether any steps are taken for settlement but no documents are produced. Meantime some of the shareholders of the Corporate Debtor filed application under Section 230-232 of the Companies Act 2013 (CA(CAA)1683/KB/2019) proposing Scheme of Arrangement. In that application we appointed Chairperson directing him to hold the meeting of the creditors and shareholders of the Corporate Debtor and file report. Chairperson filed report stating that for want of time meeting could not be held. It is also seen from the record that one of the creditors filed appeal bearing no. Company Appeal (AT) (Insolvency) No. 65 of 2020 against our order of rejection of its prayer for postponement of the date of the meeting. That appeal is still pending. Such meeting can be held and Scheme of Arrangement can be considered even after admission of the Corporate Debtor in CIRP and pending the CIRP process we have already noted that Corporate Debtor did not dispute that it has committed default in paying the financial debt of more than 1 Lakh and hence this application has to be admitted. In fact this Authority and even the Hon ble Appellate Tribunal has conclusively held that the Corporate Debtor has to be admitted in CIRP under Section 7 of IBC 2016 hence the Corporate Debtor in CIRP is admitted. Application admitted - moratorium declared.
Issues:
1. Rejection of application under Section 7 of Insolvency and Bankruptcy Code, 2016 by Adjudicating Authority. 2. Appeal by State Bank of India before NCLAT against rejection order. 3. Direction by NCLAT to admit Corporate Debtor in CIRP. 4. Consideration of Scheme of Arrangement under Sections 230-232 of the Companies Act, 2013. 5. Admission of Corporate Debtor in CIRP by the Adjudicating Authority. Analysis: 1. The Financial Creditor, State Bank of India, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor for defaulting on a financial debt of over ?17 billion. The initial application was rejected by the Adjudicating Authority citing technical grounds related to a circular declared bad in law by the Supreme Court. However, it was noted that the Corporate Debtor did not dispute the existence of the debt or the default in payment. 2. State Bank of India appealed the rejection order before the NCLAT, which set aside the rejection and directed the Adjudicating Authority to admit the application under Section 7 of the IBC, 2016. The NCLAT emphasized providing an opportunity for settlement before admission to the Corporate Debtor. 3. Following the NCLAT's direction, the Adjudicating Authority admitted the Corporate Debtor in CIRP, declaring a moratorium and initiating the public announcement process as per Sections 13, 14, and 15 of the IBC, 2016. An Interim Resolution Professional was appointed to manage the process, and necessary fees were determined for the Resolution Professional. 4. Simultaneously, a Scheme of Arrangement under Sections 230-232 of the Companies Act, 2013 was proposed by some shareholders of the Corporate Debtor. Despite procedural delays, the Authority held that such a scheme could be considered even after admission to CIRP. 5. The Adjudicating Authority concluded that the Corporate Debtor's admission to CIRP was necessary as it did not contest the default in payment. The Authority directed the Resolution Professional to conduct the CIRP in a time-bound manner, ensuring communication of the order to all relevant parties and setting a date for progress report filing. This detailed analysis highlights the progression from the initial rejection of the application to the final admission of the Corporate Debtor in CIRP, encompassing legal directives and procedural steps taken throughout the judgment.
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