2019 (5) TMI 1890 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Non Performing Asset - Financial Creditors - existence of debt and dispute or not - HELD THAT - This Bench is of the view that the debt and default is established in this case. 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 and also placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional and there being no disciplinary proceedings pending against the proposed resolution professional, 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:
- Corporate Insolvency Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016
- Default in repayment of loan by Corporate Debtor
- Establishment of debt and default
- Appointment of Interim Resolution Professional
- Imposition of moratorium period
- Direction for communication of order to parties and Interim Resolution Professional

Analysis:
1. Corporate Insolvency Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016:
The Petitioner, Equitas Small Finance Bank Ltd., sought the initiation of the Corporate Insolvency Resolution Process against Gajanan Industries Ltd., the Corporate Debtor, based on default in repayment of a loan facility amounting to ?48,82,000. The Petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, along with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

2. Default in Repayment of Loan by Corporate Debtor:
The Petition detailed that the Petitioner had sanctioned a loan of ?50,00,000 for business expansion to the Corporate Debtor, out of which ?48,82,000 was disbursed after adjusting processing fees. The loan agreement, repayment schedule, and NPA certificate were submitted as evidence of the default. Additionally, a Loan Recall Notice was issued demanding repayment of ?45,86,807 within 7 days, further indicating the default.

3. Establishment of Debt and Default:
Upon reviewing the Petition and submissions, the Bench confirmed the establishment of debt and default by the Corporate Debtor. The documents provided by the Creditor substantiated the default in repayment, leading to the decision to admit the Petition for Corporate Insolvency Resolution Process.

4. Appointment of Interim Resolution Professional:
The Adjudicating Authority appointed Mr. P. Shivan Raju as the Interim Resolution Professional to oversee the functions as prescribed under the Insolvency & Bankruptcy Code. The appointment was made to facilitate the corporate insolvency resolution process effectively.

5. Imposition of Moratorium Period:
The order imposed a moratorium effective from 01.05.2019 until the completion of the corporate insolvency resolution process or until approval of a resolution plan or liquidation order. The moratorium prohibited various actions against the Corporate Debtor, safeguarding its assets and operations during the resolution process.

6. Direction for Communication of Order to Parties and Interim Resolution Professional:
The Registry was directed to promptly communicate the order to both parties involved in the matter and the appointed Interim Resolution Professional, Mr. P. Shivan Raju. This communication aimed to ensure all relevant stakeholders were informed of the decision and the subsequent steps to be taken in the resolution process.

This comprehensive analysis outlines the key aspects of the judgment delivered by the National Company Law Tribunal, Mumbai Bench, regarding the Corporate Insolvency Resolution Process initiated against the Corporate Debtor based on default in loan repayment, culminating in the appointment of an Interim Resolution Professional and imposition of a moratorium period.