2019 (11) TMI 1597 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor has committed default in making the repayments of the term loan - existence of debt and default or not - Time Limitation - HELD THAT - It has become very clear that there was loan agreement between both the parties which is not denied by both of them. A total amount in default is ₹ 80,73,76,364.84 including interest, penal interest and other expenses. Therefore, there is no doubt that both the parties shared a relationship of creditor and debtor. Time Limitation - HELD THAT - A mere verbal acknowledgment without any evidentiary document does not extend the limitation period, but any payment made by the debtor or any acknowledgment of the debt by the debtor in his books of account is a sufficient cause to extend the limitation period as per section 18 of the Limitation Act - In the present case payments have been made regularly even after the first date of default up until April, 2016 and this petition has been filed in February, 2019 making this petition well within the limitation period. This Adjudicating Authority, on perusal of the documents filed by the creditor, is of the view that the corporate debtor defaulted in repaying the loan availed - the existence of debt and default is reasonably established by the financial creditor as a major constituent for admission of a petition under section 7 of the I and B Code. Therefore, the application under sub-section (2) of section 7 is taken as complete, accordingly this Bench hereby admits this petition. Petition admitted - moratorium declared.

Summary

Issues:
- Application under section 7 of the Insolvency and Bankruptcy Code, 2016 by Bank of India against RNA Corp. P. Ltd.
- Default in repayments of a corporate term loan of ?75,00,00,000.
- Denial of contentions by the corporate debtor.
- Dispute regarding authority to file the petition.
- Defective petition for want of Form II.
- Corporate debtor's defense of regular payments and market downturn.
- Proposal for repayment in instalments.
- Securitisation Application filed by the corporate debtor.
- Settlement of the matter by the National Company Law Appellate Tribunal.
- Fulfillment of conditions for admission of the section 7 petition.
- Adjudication on debt and default by the corporate debtor.
- Admission of the petition and imposition of moratorium.

Analysis:
The application filed by Bank of India under section 7 of the Insolvency and Bankruptcy Code, 2016 sought the corporate insolvency resolution process against RNA Corp. P. Ltd. due to default in repayments of a corporate term loan amounting to ?75,00,00,000. The petitioner provided detailed documentation including the loan agreement, guarantee deeds, mortgage deeds, and other relevant papers to support their claim.

The corporate debtor denied the contentions made by the petitioner, citing the death of a key individual and a downturn in the real estate market as reasons for payment delays. They highlighted their request for repayment in instalments and the initiation of a Securitisation Application against the petitioner's actions. However, the petitioner argued that regular payments were made post-default, justifying the timely filing of the petition within the limitation period.

The corporate debtor raised objections regarding the authority of the petitioner's representative to file the petition and the absence of Form II in the initial petition. They also contested the necessity of a board resolution supporting the power of attorney. However, the Adjudicating Authority found these objections unsubstantiated, citing a precedent from the National Company Law Appellate Tribunal that empowered the petitioner's officers to file the petition.

After considering the arguments, documents, and evidence presented by both parties, the Adjudicating Authority concluded that the debt and default were established, leading to the admission of the petition. A moratorium was imposed, prohibiting certain actions against the corporate debtor, appointing an interim resolution professional, and initiating the corporate insolvency resolution process. The registry was directed to communicate the order to the parties and the interim resolution professional promptly.