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2019 (7) TMI 1720 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - existence of debt and dispute or not - time limitation - HELD THAT - The expressions Financial Creditor and Financial debt have been defined in Section 5 (7) and 5 (8) of the Code and very precisely Financial debt is a debt along with interest, if any, which is disbursed against the consideration for time value of money - In the present case applicant bank had sanctioned and disbursed the term loan amount recoverable with applicable interest by entering in to loan agreements with the respondent corporate debtor. Even after Demerger the 'Power Division' continued to remain with the respondent Corporate Debtor, whose liability continues towards all assets and liabilities arising only from the 'Power Division'. The debt in question pertains to the facilities granted to the respondent only for 'Power Division' as are set out at part IV of the application. Time Limitation - HELD THAT - There is no dispute that the loan account was restructured on 10.06.2013 and was secured by way of mortgage. Under Article 62 of the Limitation Act, when mortgage is created over immovable property and offered as collateral security for the loan, the limitation period is 12 years. Even otherwise it is seen that the Scheme of Demerger was approved on 27.11.2017 inter alia fixing the liability of respondent pertaining to Power Project'. It creates fresh period of limitation from 27.11.2017. In view of the continuous cause of action and also in view of Article 62 of the Limitation Act, the present claim is not barred by limitation. 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 various loan facilities to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the relevant 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 IRP - the present application is complete in all respect and 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. Status of the Applicant as a Financial Creditor. 3. Validity of the Application and Completeness of Form-1. 4. Quantum and Limitation of the Debt. 5. Appointment of Interim Resolution Professional (IRP). 6. Declaration of Moratorium and its Implications. Detailed Analysis: Jurisdiction of the Tribunal: The application was filed by the Central Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against the respondent company. The Tribunal confirmed its territorial jurisdiction over the National Capital Territory of Delhi, as the registered office of the corporate debtor is situated in New Delhi. Status of the Applicant as a Financial Creditor: The Tribunal addressed the respondent's objection regarding the applicant bank not being a financial creditor. The definitions of "Financial Creditor" and "Financial Debt" under Sections 5(7) and 5(8) of the Code were examined. The Tribunal found that the applicant bank had disbursed term loans to the corporate debtor, which were recoverable with interest, thus qualifying the bank as a financial creditor. Validity of the Application and Completeness of Form-1: The respondent raised objections about the application being defective and not filed in the prescribed format. The Tribunal noted that the applicant had provided brief facts in Part V of Form-1 to explain the claim related to the Power Division of the corporate debtor. The Tribunal deemed these technical objections insignificant and confirmed that the application was complete as per the requirements of Section 7 of the Code and Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Quantum and Limitation of the Debt: The respondent disputed the demand of ?103,70,35,611/- as unreasonable and barred by limitation. The Tribunal clarified that its role was to ascertain the existence of a default, not the exact amount due. It was noted that the loan account was restructured on 10.06.2013 and secured by mortgage, giving a limitation period of 12 years under Article 62 of the Limitation Act. The Scheme of Demerger approved on 27.11.2017 also created a fresh period of limitation. The Tribunal found no merit in the respondent's objections regarding the quantum and limitation of the debt. Appointment of Interim Resolution Professional (IRP): The respondent objected to the appointment of the proposed IRP, claiming incomplete disclosures in Form-2. The Tribunal reviewed the compliance with Section 7(3)(b) of the Code and found that the applicant had proposed Mr. Shravan Kumar Vishnoi as the IRP, who had agreed to the appointment and provided the necessary declarations and disclosures. The Tribunal found no issues with the IRP's appointment. Declaration of Moratorium and its Implications: The Tribunal declared a moratorium under Section 14 of the Code, prohibiting: - 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 security interests. - Recovery of property by owners or lessors. The Tribunal directed the IRP to make a public announcement regarding the admission of the application and to perform all functions as per the Code. The Tribunal also instructed the financial creditor to deposit ?1 Lac with the IRP to cover expenses related to the resolution process. Conclusion: The Tribunal admitted the application under Section 7 of the Code, appointed Mr. Shravan Kumar Vishnoi as the IRP, and declared a moratorium. The Tribunal directed the office to communicate the order to all relevant parties and update the status of the corporate debtor on the Registrar of Companies' website.
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