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2019 (8) TMI 1598 - 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 Financial Creditor has stated that as on 31.07.2018, ₹ 33,00,000/- as principal amount and ₹ 3,90,576/- as interest amount is due and payable by the Corporate Debtor to the Financial Creditor. The Financial Creditor has stated that the short-term loan and an amount of ₹ 33,00,000/- was disbursed by the Financial Creditor to the Corporate Debtor - It is clear from ICICI Bank's letter dated 24.08.2018 which stating that the Cheque No. 000780 dated 31.07.2018 for ₹ 33,00,000/- and Cheque No. 000161 dated 31.07.2018 for ₹ 3,90,576/- drawn on HDFC Bank in favour of Vidarbha Diagnostics Pvt. Ltd. Which were deposited in to the account of the Financial Creditor is returned unrealised in clearing on 24.08.2018 with reason as fund insufficient. It is also noted that the Corporate Debtor has admitted the liability by the letters dated 06.08.2018 and 14.08.2018 and seeking time for payment. The affidavit in reply of the Corporate Debtor the statement of the counsel appearing on behalf of the Corporate Debtor to the effect that the Corporate Debtor admits the liability and is not in position to repay the debt, also establishes the existence of debt and default - application made by the Financial Creditor is complete in all respects as required by law, and it clearly shows that the Corporate Debtor has not paid the dues and this has also been confirmed by the Corporate Debtor. This Petition reveals that there is a debt as defined in section 3(11) of IBC; there is a default within the meaning of section 3(12) of IBC; the application of the Financial Creditor is complete; an amount of more than Rupees One Lakh is due and payable and in default and no disciplinary proceedings are pending against the proposed resolution professional. Therefore, this petition deserves to be admitted. Application admitted - moratorium declared.
Issues:
1. Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016. 2. Default in repayment of debt by the Corporate Debtor. 3. Admission of liability by the Corporate Debtor. 4. Completeness of the application by the Financial Creditor. 5. Appointment of Interim Resolution Professional. 6. Declaration of moratorium under Section 14 of the I&B Code. Issue 1: Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016: The Company Petition was filed by a Financial Creditor against the Corporate Debtor for defaulting on a loan amount of ?33,00,000/- as principal and ?3,90,576/- as interest. The Financial Creditor established the debt and default, meeting the criteria set out in the IBC. The Hon'ble Supreme Court's ruling in Innoventive Industries Limited v. ICICI Bank & Anr. clarified that once a default is established, the insolvency process can be initiated. The application by the Financial Creditor was found to be complete, and therefore, the petition was admitted. Issue 2: Default in repayment of debt by the Corporate Debtor: The Corporate Debtor failed to repay the principal and interest amount due on 31.07.2018, as confirmed by bounced cheques and correspondence between the parties. The Corporate Debtor acknowledged the liability but cited financial difficulties as the reason for non-payment. The admission of liability by the Corporate Debtor and the bounced cheques established the existence of debt and default, justifying the initiation of insolvency proceedings. Issue 3: Admission of liability by the Corporate Debtor: The Corporate Debtor admitted the liability for the outstanding debt but expressed inability to repay due to financial distress and lack of funds. Despite acknowledging the debt, the Corporate Debtor stated its incapacity to commit to repayment, further supporting the Financial Creditor's claim for initiating insolvency proceedings. Issue 4: Completeness of the application by the Financial Creditor: The application by the Financial Creditor was found to be complete as per the legal requirements. It clearly demonstrated the non-payment by the Corporate Debtor, which was also acknowledged by the Corporate Debtor. The completeness of the application, along with the confirmation of default, justified the admission of the petition by the Tribunal. Issue 5: Appointment of Interim Resolution Professional: The Tribunal approved the appointment of Ms. Minita D. Raja as the Interim Resolution Professional to oversee the corporate insolvency resolution process. The IRP was tasked with managing the affairs of the Corporate Debtor and carrying out functions as per the provisions of the IBC. The appointment aimed at facilitating the resolution process and ensuring compliance with the regulatory framework. Issue 6: Declaration of moratorium under Section 14 of the I&B Code: The Tribunal declared a moratorium under Section 14 of the I&B Code, prohibiting various actions against the Corporate Debtor. The moratorium aimed to protect the assets of the Corporate Debtor during the insolvency resolution process and maintain the status quo. Essential supplies to the Corporate Debtor were ensured, and the management was vested in the IRP to facilitate a smooth resolution process. This detailed analysis of the judgment highlights the key issues addressed by the Tribunal in the context of initiating corporate insolvency proceedings under the Insolvency & Bankruptcy Code, 2016.
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