2019 (9) TMI 1455 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt or not - existence of debt and dispute or not - HELD THAT - This adjudicating Authority finds that the Corporate Debtor admits that debt and offered to settle the amount and his only grievance is in respect of amount. According to the Corporate Debtor, the amount is wrongly mentioned and the Corporate Debtor has not disputed about the debt. The application filed on behalf of financial creditor/Applicant under Section 7 of IBC is found complete. It further appears that there is default in non-payment of the debt owed by the corporate debtor, applicant has annexed sufficient evidence to show the default on behalf of the corporate debtor. Therefore application filed U/S 7 of IBC deserves to be admitted. Application 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. Existence of financial debt and default by the Corporate Debtor.
3. Maintainability of the petition.
4. Appointment of Interim Resolution Professional (IRP).
5. Declaration of moratorium under Section 13 and 14 of the IBC.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by the financial creditor, Corporation Bank, for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Shahjahanpur Edibles Private Limited.

2. Existence of Financial Debt and Default:
The financial creditor provided evidence of a cash credit facility and term loan sanctioned to the Corporate Debtor, which were secured by various documents, including demand promissory notes and hypothecation agreements. The Corporate Debtor defaulted on these loans, leading to the classification of the accounts as Non-Performing Assets (NPA) on 31.03.2018. The total outstanding amount was ?10,62,59,056.75 plus interest from 31.01.2019.

3. Maintainability of the Petition:
The Corporate Debtor raised questions about the maintainability of the petition, arguing that the debt amount was disputed and the property mortgaged was already under another loan. However, the tribunal found that the financial creditor had provided sufficient evidence of default and that the Corporate Debtor had admitted the debt, albeit disputing the amount.

4. Appointment of Interim Resolution Professional (IRP):
The financial creditor proposed Mr. Manish Agarwal as the Interim Resolution Professional (IRP), and he filed a declaration affirming his eligibility and that no disciplinary proceedings were pending against him. The tribunal appointed Mr. Manish Agarwal as the IRP.

5. Declaration of Moratorium:
A moratorium was declared under Sections 13 and 14 of the IBC, prohibiting:
- The institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Actions to foreclose or enforce any security interest created by the Corporate Debtor.
- Recovery of any property by an owner or lessor occupied by the Corporate Debtor.

The IRP was directed to comply with Sections 13(2), 15, 17, and 18 of the IBC. The Directors, Promoters, or any person associated with the management of the Corporate Debtor were directed to cooperate with the IRP as prescribed under Section 19.

Conclusion:
The application filed under Section 7 of the IBC was found to be complete, and the tribunal admitted the application. Mr. Manish Agarwal was appointed as the IRP, and a moratorium was declared to facilitate the CIRP. The registry was directed to communicate the order to the financial creditor, Corporate Debtor, and IRP. The case was listed for a progress report on 15.10.2019.

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