2019 (8) TMI 1740 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - cheque dishonored - Financial Creditors - existence of debt and dispute or not - HELD THAT - As the Corporate Debtor having admitted the debt and not able to clear the dues outstanding, the petitioner has proved existence of debt and default against the Corporate Debtor, therefore looking at the consent given by an Insolvency Professional, the petition is admitted. Petition admitted - moratorium declared.

Summary

Issues:
1. Initiation of insolvency resolution process under section 7 of IBC against the Corporate Debtor for default in repayment.
2. Confirmation of debt and default by the Corporate Debtor.
3. Appointment of Insolvency Resolution Professional (IRP) and declaration of moratorium.
4. Specific directions regarding moratorium and essential goods/services supply during the process.
5. Provisions related to the effect and duration of the moratorium.
6. Public announcement of the corporate insolvency resolution process.

Analysis:
1. The Financial Creditor filed a Company Petition under section 7 of the Insolvency and Bankruptcy Code (IBC) against the Corporate Debtor for defaulting on repayment of a significant amount along with interest. The Corporate Debtor had acknowledged the debt but failed to clear the outstanding dues, leading to the initiation of the insolvency resolution process.

2. The Tribunal examined the details of the transactions between the parties, where the Financial Creditor had advanced funds to the Corporate Debtor, who subsequently issued a dishonored cheque due to insufficient funds. The Corporate Debtor, despite partial repayment, could not settle the remaining balance, establishing the existence of debt and default.

3. In light of the admitted debt and default by the Corporate Debtor, the Tribunal admitted the petition and appointed an Insolvency Resolution Professional (IRP) to manage the process. The IRP was directed to compute the claim, deducting any payments made by the Corporate Debtor during the proceedings.

4. The Tribunal declared a moratorium prohibiting various actions against the Corporate Debtor, including legal proceedings, asset disposal, and enforcement of security interests. It also ensured the continuity of essential goods/services supply to the Corporate Debtor during this period.

5. Specific provisions were outlined regarding the effect and duration of the moratorium, specifying its applicability until the completion of the corporate insolvency resolution process or approval of a resolution plan by the Tribunal.

6. Additionally, the Tribunal ordered the immediate public announcement of the corporate insolvency resolution process and appointed the IRP to carry out the necessary functions as per the IBC regulations. The Registry was directed to communicate these orders promptly to the parties involved.

This comprehensive analysis highlights the key legal aspects and decisions made by the Tribunal in the judgment regarding the initiation of insolvency proceedings, confirmation of debt and default, appointment of an IRP, declaration of moratorium, and related procedural directions for the resolution process.