2019 (7) TMI 1715 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditor or not - existence of debt and dispute or not - HELD THAT - It is not disputed that there is a debt which is more than one lakh and the respondent corporate debtor has failed to pay the debt even after the demand. Thus existence of default is clearly evident - That apart there is no dispute that the applicant comes within the purview of Financial creditor . It is seen that the corporate debtor had availed the loan amount against payment of interest as agreed between the parties. The acknowledgement and the books of account of the respondent itself as well as reply to the demand notice reveals that the loan was disbursed against payment of interest. The loan was taken against consideration for time value of money with a clear commercial effect of borrowing. Moreover the debt claimed in the present application includes both the component of outstanding principal and interest. In that view of the matter not only the present claim comes within the purview of Financial Debt but also the applicant can clearly be termed as Financial Creditor of the respondent corporate debtor so as to prefer the present application under Section 7 of the Code. 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 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 admission of default in payment of the financial debt. Application admitted - moratorium declared.

Summary

Issues:
- Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
- Existence of default in repayment of loan by the corporate debtor.
- Admissibility of the application by the Tribunal.
- Appointment of an Interim Resolution Professional.
- Declaration of moratorium under Section 14 of the Code.

Analysis:
1. The application was filed by a financial creditor seeking initiation of Corporate Insolvency Resolution Process against the respondent company for defaulting on a loan amount. The applicant provided evidence of the loan disbursement, acknowledgment letters, bank statements, and ledger accounts to support the claim.

2. The respondent company admitted the liability and default in repayment of the loan amount, as recorded in its financial books. The Tribunal noted the clear admission of default by the respondent, emphasizing that a mere promise to pay in the future does not negate the existing default.

3. The Tribunal found that the applicant met the criteria of a financial creditor under the Code, as the loan was disbursed against interest, and the debt claimed included both principal and interest components. The application was complete, and the Tribunal admitted it under Section 7 of the Code.

4. The Tribunal appointed an Interim Resolution Professional as per the requirements of the Code. The appointed professional was directed to make a public announcement, and the financial creditor was instructed to deposit a sum to meet expenses related to the resolution process.

5. A moratorium was declared under Section 14 of the Code, imposing restrictions on legal actions against the corporate debtor and asset transfers. Exceptions to the moratorium were specified, and the Interim Resolution Professional was tasked with managing the affairs of the corporate debtor in accordance with the Code.

6. The Tribunal directed communication of the order to relevant parties and authorities, including the Financial Creditor, Corporate Debtor, Interim Resolution Professional, and the Registrar of Companies, ensuring public notification of the admission of the petition.