2019 (7) TMI 1716 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dipsute or not - dishonor of Cheque - HELD THAT - It is no longer res Integra that if there is a debt and default and the application under Section 7 of the Code is complete Adjudicating Authority is bound to admit the application - In the present case applicant financial creditor has placed on record its bank account statement maintained with Kotak Mohindra Bank K. G. Marg New Delhi Branch to show that the loan amount of 1 Crore was disbursed to the respondent company on 31.07.2017. Respondent corporate debtor has not disputed the receipt of the said loan amount. The material on record clearly goes to show that the respondent corporate debtor has committed default in payment of the outstanding loan amount. The fact that there is a debt due to the applicant financial creditor and the respondent corporate debtor defaulted to pay the amount has not been disputed - The Code gets triggered the moment default is of rupees one lakh or more. It is thus evident that there is a debt which is more than 1 lakh and the corporate debtor has failed to pay the debt. 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 default in payment of the financial debt. In terms of Section 7 (5) (a) of the Code the present application is admitted - Moratorium declared.

Issues Involved:
1. Jurisdiction of the Tribunal
2. Existence of Debt and Default
3. Compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016
4. Appointment of Interim Resolution Professional (IRP)
5. Declaration of Moratorium

Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Tribunal asserted its jurisdiction over the matter as the registered office of the respondent corporate debtor, M/s. Indo-Gulf Diagnostics and Research Centre Pvt. Ltd., is located in New Delhi. This falls within the territorial jurisdiction of the National Company Law Tribunal, Principal Bench, New Delhi, as per sub-section (1) of Section 60 of the Insolvency and Bankruptcy Code, 2016.

2. Existence of Debt and Default:
The applicant, Endless Services Pvt. Ltd., claimed that a loan of ?1 crore was granted to the respondent corporate debtor on 30.07.2017, as evidenced by a Loan Agreement cum Memorandum of Understanding. The corporate debtor was obligated to repay the loan within 18 months and pay monthly interest. However, the debtor defaulted after the first month, paying only a small amount of ?1 lakh after the loan period expired. Four postdated cheques issued by the debtor were dishonored due to insufficient funds, and a cheque for ?1.20 crores given during the hearing also bounced. The Tribunal found that there was no dispute regarding the debt and default, thus satisfying the criteria for initiating the Corporate Insolvency Resolution Process (CIRP).

3. Compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016:
The application was filed under Section 7 of the Code, which mandates the financial creditor to provide necessary documentation and evidence of default. The applicant submitted bank statements showing the disbursement of the loan amount and copies of dishonored cheques. The Tribunal verified that the application was complete, with all required information and documents, including the particulars of the financial debt and evidence of default. The Tribunal cited the Supreme Court's observation in the case of Mobilox Innovations Private Limited v. Kirusa Software Private Limited, emphasizing that the adjudicating authority must admit the application if it is satisfied with the existence of default and the completeness of the application.

4. Appointment of Interim Resolution Professional (IRP):
The applicant proposed Mr. Ajay Goyal as the Interim Resolution Professional (IRP), providing his credentials and declaration of no pending disciplinary proceedings. The Tribunal appointed Mr. Ajay Goyal as the IRP, directing him to make a public announcement regarding the admission of the application within three days. The financial creditor was instructed to deposit ?1 lakh with the IRP to cover initial expenses, subject to adjustment as per the rules.

5. Declaration of Moratorium:
The Tribunal declared a moratorium in terms of Section 14 of the Code, imposing prohibitions on:
(a) Institution or continuation of suits or proceedings against the corporate debtor.
(b) Transferring, encumbering, or disposing of any assets of the corporate debtor.
(c) Foreclosure or enforcement of security interests.
(d) Recovery of property occupied by the corporate debtor.
The moratorium does not apply to transactions notified by the Central Government or the supply of essential goods or services. The Tribunal emphasized the IRP's duty to manage the corporate debtor's affairs and preserve its property value. All personnel connected with the corporate debtor were legally obligated to cooperate with the IRP.

Conclusion:
The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, satisfied that the debt and default were established, the application was complete, and the proposed IRP had no pending disciplinary proceedings. The Tribunal directed the IRP to proceed with the CIRP and declared a moratorium to protect the corporate debtor's assets and operations.

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