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2019 (9) TMI 1424 - 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 debt became final when an Award dated 18.05.2016 was passed by the Arbitral Tribunal vide C.M.P. No. 55/2012. Therefore, there is no dispute with regard to the alleged amount. The contention that the Corporate Debtor is not responsible for payment of the Arbitral Award is not at all tenable. The award empowers the Financial Creditor to recover the Award amount from the Respondent. The Corporate Debtor is also given sufficient time for repayment in the light of the debt and default apparent on the facts of the record. However, the Corporate Debtor is failed to avail the opportunity. The instant Company Petition is filed in accordance with law and the debt and default admittedly are not in dispute. Petition admitted - moratorium declared.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. 2. Validity and enforceability of the Arbitration Award. 3. Classification of the Petitioner as a Financial Creditor and the Respondent as a Corporate Debtor. 4. Compliance with procedural requirements for initiating CIRP. 5. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium. Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016: The Petitioner, M/s. Sri Arumuga Sugars Limited, filed C.P.(IB) No. 43/BB/2019 under Section 7 of the IBC, 2016, seeking to initiate CIRP against M/s. Badami Sugars Limited for defaulting on a debt amounting to ?22,84,07,970/-. The Tribunal noted that the application was filed in accordance with the law, and the debt and default were not in question. 2. Validity and enforceability of the Arbitration Award: The Petitioner referred to an Arbitration Award dated 18.05.2016, which became enforceable under Section 36 of the Arbitration & Conciliation Act, 1996. The award mandated the Respondent to pay ?10,06,00,000/- with interest at 18% per annum from 28.10.2011 until realization. The Tribunal confirmed that the award was final and enforceable, and the Respondent had not obtained a stay against its enforcement. 3. Classification of the Petitioner as a Financial Creditor and the Respondent as a Corporate Debtor: The Respondent contended that the Petitioner could not be classified as a Financial Creditor since the transaction was part of a Share Purchase Agreement and not a loan or debt. However, the Tribunal rejected this argument, stating that the Arbitration Award confirmed the Petitioner's right to recover the advanced amount, thereby classifying the Petitioner as a Financial Creditor and the Respondent as a Corporate Debtor. 4. Compliance with procedural requirements for initiating CIRP: The Tribunal referred to the Hon'ble NCLAT and Supreme Court judgments, emphasizing the need for the Adjudicating Authority to ascertain the existence of a default before admitting an application under Section 7 of the IBC. The Tribunal was satisfied that the Petitioner had complied with all procedural requirements, including the submission of necessary documents and records. 5. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium: The Tribunal appointed Mr. Madhugir Venkatarayappa Sudarshan as the IRP, with Registration No. IBBI/IPA-002/IP-N00561/2017-18/11707. A moratorium was declared, prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery of property by owners. The IRP was directed to follow all extant provisions of the IBC, 2016, and file progress reports to the Adjudicating Authority. Conclusion: The Tribunal admitted the Petition, initiated CIRP against the Respondent, appointed an IRP, and declared a moratorium, thereby providing a comprehensive resolution process in accordance with the IBC, 2016.
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