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2020 (3) TMI 1267 - 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 - whether the amount claimed from the Respondent Corporate Debtor Company by the Applicants is a financial debt or not? - HELD THAT - Financial Debt , to the extent relevant for the purpose of this case, is defined in Clause (a) of sub-section (8) of Section 5 of the Code. It says, financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes money borrowed against the payment of interest. his Adjudicating Authority is satisfied that, a) Existence of debt is above Rs. One Lac; b) Debt is due and defaulted; c) Default has occurred on 31 st August, 2017; d) Petition has been filed within the limitation period as the date of default is 31 st August, 2017 and the petition has been filed on 09.09.2019 i.e. within three years of the default. e) Copy of the Application filed before this Tribunal has been sent to the Corporate Debtor. The application filed by the Petitioner under Section 7 of Code is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Respondent Corporate Debtor Company. Petition admitted - moratorium declared.
Issues Involved:
1. Whether the amount claimed by the Applicants from the Respondent Corporate Debtor Company constitutes a "financial debt" under the Insolvency and Bankruptcy Code, 2016. 2. Whether the petition filed by the Applicants is maintainable. 3. Whether the settlement deed dated 20.06.2018 affects the claims of the Applicants. 4. Whether the application is filed within the limitation period. Detailed Analysis: 1. Financial Debt: The primary issue was to ascertain if the amount claimed by the Applicants is a "financial debt" as defined under Section 5(8) of the Insolvency and Bankruptcy Code, 2016. The Applicants argued that their remuneration as Directors was converted into Unsecured Loans, which were reflected in the balance sheets and supported by TDS certificates showing interest payments at 10% per annum. The Respondent Corporate Debtor Company admitted the debt and deducted TDS on the interest payable. The Tribunal concluded that the debt constituted a financial debt as it was disbursed against the consideration for the time value of money. 2. Maintainability of the Petition: The Respondent Corporate Debtor Company raised objections regarding the maintainability of the petition, arguing that it was filed on behalf of three persons but signed by only one. The Tribunal, however, did not find this argument sufficient to dismiss the petition. 3. Settlement Deed: The Respondent Corporate Debtor Company contended that a settlement deed dated 20.06.2018 between the parties precluded the Applicants from raising any claims. The Tribunal decided not to consider the settlement agreement while disposing of the present petition, focusing instead on the statutory requirements under the Insolvency and Bankruptcy Code. 4. Limitation Period: The Tribunal verified that the default occurred on 31st August 2017, and the petition was filed on 19th February 2019, which is within the three-year limitation period as prescribed by law. Observations and Order: The Tribunal observed that the debt was acknowledged by the Respondent Corporate Debtor Company, reflected in their balance sheets, and TDS was deducted on the interest payable. The Tribunal found that: - The existence of debt is above Rs. One Lac. - The debt is due and defaulted. - The default occurred on 31st August 2017. - The petition was filed within the limitation period. - The application filed by the Petitioner is complete for the initiation of Corporate Insolvency Resolution Process. The Tribunal admitted the petition and declared a moratorium prohibiting suits, transferring of assets, and other actions against the corporate debtor. Mr. Parag Sheth was appointed as the Interim Resolution Professional to manage the Corporate Insolvency Resolution Process and make a public announcement of the moratorium. The Tribunal directed all personnel connected with the Corporate Debtor to cooperate with the Interim Resolution Professional. The Tribunal ordered that an authentic copy of the order be communicated to the Operational Creditor, Corporate Debtor, Interim Resolution Professional, and the Registrar of Companies. The petition CP(IB) No. 161/7/NCLT/AHM/2019 was admitted on 16.03.2020 with the above observations and directions.
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