2019 (7) TMI 1721 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - 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 a 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.

Summary

Issues:
Company Petition filed under Section 7 of Insolvency & Bankruptcy Code, 2016 by Financial Creditor against Corporate Debtor for default in payment.

Analysis:
The Financial Creditor, Punjab National Bank, initiated a Company Petition under Section 7 of the Insolvency & Bankruptcy Code, 2016 against the Corporate Debtor, POSCHO Steels Pvt. Ltd., due to non-payment of ?167,40,33,396/-, including interest, with a default date of 04.04.2016. The Financial Creditor mentioned that various loan and security documents were executed by the Corporate Debtor to secure credit facilities, and the account was classified as Non-Performing Asset on 31.12.2015. Additionally, possession notices were issued when the due amount was not repaid, and settlement attempts were unsuccessful despite admission of outstanding amounts by the Corporate Debtor.

The Financial Creditor submitted evidence of outstanding dues and defaults, including bank statements and correspondence regarding settlement plans. The Tribunal noted that the Corporate Debtor did not contest the Petition, indicating the existence of debt and default. Referring to the Supreme Court's decision in Innoventive Industries Limited v. ICICI Bank & Anr., it was established that the provisions of Section 7 apply when a financial debt and default are proven. The completeness of the application and confirmation of unpaid operational debt further supported the admission of the Petition.

Consequently, the Tribunal admitted the Petition, declaring a moratorium under Section 14 of the Insolvency & Bankruptcy Code. The moratorium prohibited legal actions against the Corporate Debtor, asset disposal, and enforced security interests. Essential supplies to the Corporate Debtor were to continue during the moratorium, and specific transactions exempt from the moratorium were outlined. The order of moratorium was effective until the completion of the insolvency resolution process or liquidation. An Interim Resolution Professional was appointed, and the public announcement of the insolvency resolution process was mandated.

In conclusion, the Tribunal admitted the Petition, imposed a moratorium, appointed an Interim Resolution Professional, and issued consequential directions to facilitate the insolvency resolution process. The detailed analysis of the debt, default, and procedural requirements led to the decision to initiate the corporate insolvency resolution process against the Corporate Debtor.