2019 (10) TMI 1379 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - It is evident that financial debt of more than Rupees One Lakhs is due and payable by the Corporate Debtor to the Applicant as on the date of filing of this Application. It is further observed by this Bench that the Corporate Debtor has acknowledged the debt vide Inter Corporate Deposit Receipt dated 17.03.2017 and also through its letter dated 05.03.2018. Also, the Corporate Debtor in its written submissions has admitted the debt and its default. The Corporate Debtor has annexed Ledger Account of Applicant maintained in its Books of Accounts for the period 01.04.2019 to 26.08.2019 showing a debit balance of ₹10,43,976/- - an amount of more than ₹1,00,000/- is admitted to be due and payable and there is default by the Corporate Debtor in repayment of the loan amount. The Corporate Debtor has also breached the terms and conditions of the consent terms dated 15.05.2018. The Inter Corporate Deposit of ₹1,00,00,000/- is loan granted by the Applicant to the Corporate Debtor as the same is given for the time value of money, the said loan facility thus amounts to financial debt within the meaning of section 5(8) of the I B, Code 2016. Copy of Undertaking for Inter Corporate Deposit by Corporate Debtor, Demand Promissory Note, Deed of Guarantee and Certificate under the Bankers Book Evidence Act, 1981 dated 07.09.2019 are annexed to the Application. It is pertinent to mention that all the documents mentioned above establish financial debt - Application is complete and has been filed under the proper form. The Application is filed within limitation as the date of last payment made by the Corporate Debtor is 03.03.2019. Copy of the Letter dated 04.10.2019 from Union Bank of India reflecting payment of ₹4,39,169/- on 03.03.2019 is annexed to the Application. The Application under sub-section (2) of Section 7 of I B Code, 2016 is complete. The existing financial debt of more than rupees one lakh against the corporate debtor and its default is also proved - application admitted - moratorium declared.

Summary

Issues involved:
Application under Section 7 of Insolvency & Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor.

Detailed Analysis:

1. Background of the Application:
The Application, C.P. (IB) No. 1874/NCLT/MB/2019, was filed by the Financial Creditor against the Corporate Debtor under section 7 of the Insolvency & Bankruptcy Code, 2016, citing a default amount which was later revised due to partial payments made by the Corporate Debtor.

2. Loan Facility and Default:
The Financial Creditor provided a loan facility in the form of an Inter Corporate Deposit to the Corporate Debtor, secured by various documents. The Corporate Debtor defaulted on repayment, leading to the initiation of the CIRP.

3. Previous Settlement Attempts:
Previous attempts at settlement through consent terms failed as the Corporate Debtor breached the agreed terms by dishonoring post-dated cheques and failing to make payments as per the schedule.

4. Acknowledgment of Debt:
The Corporate Debtor acknowledged the debt through various documents, including an Inter Corporate Deposit Receipt and a confirmation letter. The Corporate Debtor admitted the debt and default during the proceedings.

5. Legal Compliance and Documentation:
The Application was found to be complete and filed within the limitation period. The documentation provided by the Applicant established the existence of a financial debt, meeting the requirements under the I&B Code.

6. Admission of Application:
After considering the evidence and submissions, the Tribunal admitted the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating the corporate insolvency resolution process against the Corporate Debtor.

7. Order and Consequential Directions:
The Tribunal declared a moratorium under section 14 of the I&B Code, prohibiting certain actions against the Corporate Debtor, ensuring continuity of essential services, and appointing an Interim Resolution Professional to oversee the process.

8. Compliance and Communication:
The Registry was directed to communicate the order to the parties involved, and a compliance report was to be submitted promptly.

This detailed analysis covers the key aspects of the judgment, outlining the legal proceedings, defaults, acknowledgments, compliance, and the consequential directions issued by the Tribunal.