2019 (12) TMI 1454 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - financial debt - existence of debt and dispute or not - HELD THAT - The application made by the financial creditor is complete in all respects as required by law. It clearly shows that the corporate debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the petition. In view of this, this Adjudicating Authority admits this petition and orders initiation of CIRP against the corporate debtor. Petition admitted - moratorium declared.

Summary

Issues:
- Initiation of corporate insolvency resolution process under section 7 of the Insolvency and Bankruptcy Code, 2016.
- Default on repayment by the corporate debtor.
- Completeness of the application by the financial creditor.
- Appointment of interim resolution professional.
- Moratorium under section 14 of the IBC.
- Public announcement of the CIRP.
- Management of the corporate debtor during the CIRP.
- Deposit by financial creditor for expenses.
- Communication of the order to relevant parties.
- Compliance report to be sent to the court.

Analysis:
1. The petition was filed by a financial creditor seeking to initiate the corporate insolvency resolution process (CIRP) against the corporate debtor under section 7 of the Insolvency and Bankruptcy Code, 2016. The financial creditor provided details of the financial debt owed by the corporate debtor, including the principal amount, interest, and other expenses, totaling to a significant sum. The corporate debtor was found to be a private company limited by shares, and the jurisdiction of the tribunal was established based on the corporate identity number and registered office location.

2. The financial creditor presented evidence of default on repayment by the corporate debtor, including details of the loans sanctioned, recall notices issued, and the declaration of the loan account as a non-performing asset (NPA). Legal proceedings were initiated by the financial creditor to recover the outstanding amounts, leading to a decree by the Debts Recovery Tribunal. Despite being served with the petition, the corporate debtor did not respond or present a defense during the proceedings.

3. The tribunal found the application made by the financial creditor to be complete as per the requirements of the law. The default on the debt by the corporate debtor was established, meeting the minimum amount stipulated under the Insolvency and Bankruptcy Code. Consequently, the tribunal admitted the petition and ordered the initiation of the CIRP against the corporate debtor.

4. An interim resolution professional was appointed by the tribunal to oversee the resolution process. The moratorium under section 14 of the IBC was declared, affecting various actions related to the corporate debtor's assets and legal proceedings against it. The management of the corporate debtor was vested in the resolution professional during the CIRP period, with specific responsibilities outlined for the officers and managers of the company.

5. The financial creditor was directed to deposit a sum to cover expenses related to issuing public notices and inviting claims, subject to approval by the committee of creditors. The tribunal also mandated the communication of the order to all relevant parties and directed the Registrar of Companies to update the corporate debtor's information promptly. Additionally, a compliance report was required to be sent to the court within a specified timeframe.

6. In conclusion, the tribunal's comprehensive judgment addressed the various legal aspects involved in the initiation of the corporate insolvency resolution process, ensuring adherence to the provisions of the Insolvency and Bankruptcy Code and safeguarding the interests of the parties involved in the proceedings.