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2021 (2) TMI 1187 - Tri - Insolvency and BankruptcyMaintainability 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 - The petition 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 the minimum amount of one lakh rupees as stipulated under section 4(1) of the Code at the relevant time. But on perusal of the master data of the Corporate Debtor it is seen that the Corporate Debtor has given a Corporate Guarantee of ₹ 4,82,42,00,000/-. On further enquiry and on perusal of the financial statements for the financial year 2018-19 of the Corporate Debtor, it has come to light that the net worth of the Corporate Debtor is ₹ 15,36,39,015/-. It is hard to convince oneself that a Company having a networth of ₹ 15,36,39,015/- is not able to make a payment of ₹ 3,00,000/-. It appears that the petition at hand has been filed in collusion with the Corporate Debtor. Petition cannot be admitted and is dismissed.
Issues:
Company Petition under section 7 of the Insolvency and Bankruptcy Code, 2016 - Default in payment by Corporate Debtor - Jurisdiction of the Tribunal - Financial Creditor's claim of unpaid debt - Corporate Debtor's defense of economic circumstances - Appointment of Interim Resolution Professional - Admissibility of the petition. Analysis: The judgment pertains to a Company Petition filed under section 7 of the Insolvency and Bankruptcy Code, 2016 by a Financial Creditor against a Corporate Debtor for defaulting on a payment of ?3,00,000 as on 31.03.2019, with an additional interest of 15% p.a. The Financial Creditor provided an unsecured loan to the Corporate Debtor in January 2019, which was acknowledged through a demand promissory note. The Financial Creditor demanded repayment through a letter dated 16.10.2019. The Financial Creditor submitted bank statements and other documents as evidence of the transaction. The Corporate Debtor, in response, claimed that the loan was invested in business activities and could not be repaid due to economic recession and business losses. The Corporate Debtor argued that it was not a wilful defaulter but a victim of circumstances leading to the inability to make the payment. The Financial Creditor proposed an Interim Resolution Professional, complying with the necessary rules and regulations. Upon review, the Tribunal found that the Corporate Debtor had a substantial net worth of ?15,36,39,015, raising doubts about its inability to repay a relatively small amount of ?3,00,000. The Tribunal observed that the Corporate Debtor had given a Corporate Guarantee of ?4,82,42,00,000, further questioning the default scenario. The Tribunal inferred collusion between the parties due to the discrepancy in financial positions, leading to the dismissal of the petition. The Tribunal concluded that the petition lacked merit and declined to admit it, ultimately dismissing CP (IB) No. 2192/KB/2019. The judgment highlights the importance of substantiating claims of default with concrete evidence and the need for consistency in financial positions to establish the credibility of insolvency petitions. The decision underscores the Tribunal's role in scrutinizing petitions to prevent misuse and ensure the integrity of the insolvency resolution process.
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