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2019 (12) TMI 1368 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - The corporate debtor is entitled to point out to the Adjudicating Authority that a default has not occurred; in the sense that a debt which may also include a disputed claim is not due i.e. it is not payable in law or in fact. However it is not the case of respondent that the entire loan or the entire OTS amount has been paid. Bank loan having not paid in its entirety the default of debt is apparent - It is pertinent to mention here that the Code requires the adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. The material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the outstanding loan amount. In the facts it is seen that the applicant bank clearly comes within the definition of Financial Creditor. The material placed on record further confirms that applicant financial creditor had disbursed loan facilities to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the outstanding financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed Interim Resolution Professional - the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt. Application admitted - moratorium declared.
Issues Involved:
1. Triggering of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Determination of the status of the applicant as a Financial Creditor. 3. Examination of the debt and default status. 4. Consideration of objections raised by the respondent, including the claim of limitation and excess interest. 5. Appointment of an Interim Resolution Professional (IRP) and declaration of moratorium. Issue-wise Detailed Analysis: 1. Triggering of Corporate Insolvency Resolution Process (CIRP): The Jammu & Kashmir Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process against Integrated Livestock Village Farm Private Limited. The application was filed due to the respondent's failure to repay the credit facilities availed from the applicant bank, resulting in a default. 2. Determination of the Status of the Applicant as a Financial Creditor: The applicant bank sanctioned and disbursed various loan amounts to the corporate debtor, recoverable with applicable interest. The loans were disbursed against the consideration for time value of money, meeting the definition of "Financial Debt" under Section 5(8) of the Code. Consequently, the applicant bank qualifies as a "Financial Creditor" as per Section 5(7) of the Code. 3. Examination of Debt and Default Status: The applicant bank provided substantial evidence, including loan agreements, security documents, and statements of accounts, confirming the disbursement and utilization of loan facilities by the corporate debtor. The debt claimed amounted to Rs. 22,93,41,381.24, with further interest from 01.05.2019. The tribunal found that the debt was due and there was a clear occurrence of default, satisfying the conditions under Section 7(5)(a) of the Code. 4. Consideration of Objections Raised by the Respondent: - Limitation Claim: The respondent argued that the application was time-barred as the default occurred on 27.09.2015, and the application was filed in May 2019. However, the tribunal noted that the respondent acknowledged the debt and made partial payments as recently as 02.04.2019, thus extending the limitation period. - Excess Interest Claim: The respondent alleged that the applicant bank charged excess interest. The tribunal clarified that disputes over the quantum of default do not affect the maintainability of an application under Section 7, as the tribunal's role is to ascertain the occurrence of default, not to determine the exact amount due. - NPA Declaration: The respondent contended that the account was wrongly declared as NPA. The tribunal stated that the NPA status under the SARFAESI Act, 2002, is irrelevant to the proceedings under the Insolvency and Bankruptcy Code, 2016. 5. Appointment of Interim Resolution Professional (IRP) and Declaration of Moratorium: The tribunal appointed Mr. Neeraj Bhatia as the Interim Resolution Professional, as proposed by the applicant. A moratorium was declared under Section 14 of the Code, prohibiting suits, asset transfers, enforcement actions, and recovery of property by owners or lessors against the corporate debtor. The IRP was directed to make a public announcement and perform his duties as per the Code, Rules, and Regulations. Conclusion: The tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, satisfied that the applicant bank is a Financial Creditor, the debt is due, and default has occurred. The tribunal appointed an Interim Resolution Professional and declared a moratorium, directing the applicant to deposit Rs. 2 Lakhs with the IRP for expenses. The order emphasized the necessity for cooperation from the corporate debtor's personnel and the IRP's duty to protect the corporate debtor's property.
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