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2019 (3) TMI 1910 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - delivery of notice to Corporate Debtor - HELD THAT - The notice has been issued to the CD for its appearance. The FC has attempted to serve the notice by post, by way of hand delivery and lastly by way of email. The affidavit filed on the side of the FC proves that the attempt of the FC to serve notice by hand has not been successful because of the refusal on the side of CD in accepting the notice served by hand. However, the service of notice issued by post has been delivered to the CD. So also, service of notice through email was also successfully done in the case in hand. The CD, therefore, was called absent and declared ex parte, being satisfied that there was delivery of notice to the CD and the CD did not turn up for defending the case after remitting back the case from the Appellate Tribunal to this Bench and that the Hon ble NCLAT remitted with a direction to admit it. Also, the FC has compiled with all the requirements to be meted out as per Section 7 (3) of the Code of 2016 and name of the Resolution Professional (in short, RP) has been proposed. Form 2 produced along with the application proves that there is no disciplinary proceeding pending against the RP. Annexure-2 at page 67 of the application s the Form 2. Mr Chhedi Rajbhar is the insolvency professional proposed by the applicant in the application. Application admitted - moratorium declared.
Issues Involved:
1. Maintainability of the application under Section 7 of the Insolvency & Bankruptcy Code, 2016. 2. Alleged default in repayment of loans by the Corporate Debtor (CD). 3. Transfer of management and liabilities to the new management (BK Group). 4. Claim of the debt being barred by limitation. 5. Appointment of the Insolvency Resolution Professional (IRP). 6. Declaration of moratorium and public announcement. Detailed Analysis: 1. Maintainability of the Application: The Financial Creditors (FCs) filed a joint application under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (CD). The CD contended that the application was not maintainable, arguing that the current management (BK Group) had not defaulted on the repayment of loans and that the FCs, who were part of the previous management, had transferred their shareholdings and certain liabilities to the BK Group under an agreement dated 15.12.2014. 2. Alleged Default in Repayment of Loans: The FCs alleged that the CD had defaulted on the repayment of unsecured loans amounting to ?51,50,000 from FC1 and ?25,00,000 from FC2, with the total amounts due, including interest, reaching ?83,30,499 and ?38,52,630 respectively by 15.11.2017. The CD, however, denied any default, stating that the new management had always expressed a desire to liquidate all liabilities but faced non-cooperation from the previous management. 3. Transfer of Management and Liabilities: The CD argued that the FCs, as part of the previous management, had transferred their shareholdings and certain liabilities to the BK Group under specific terms and conditions. The BK Group claimed to have paid ?1 crore out of ?2.20 crores to unsecured creditors and cleared some statutory dues. The CD asserted that the FCs' claim of default was unfounded as the new management had not committed any default. 4. Claim of Debt Being Barred by Limitation: The CD contended that the debt in question was barred by limitation and that the FCs had failed to prove any default. However, the Hon'ble NCLAT, upon appeal, set aside the initial dismissal of the application by the Adjudicating Authority, ruling that the claim was not barred by limitation and that there was a debt payable by the CD to the FCs, which the CD had defaulted on. 5. Appointment of the Insolvency Resolution Professional (IRP): The FCs proposed Mr. Chhedi Rajbhar as the IRP, and the application included a Form 2 confirming no disciplinary proceedings against him. The Adjudicating Authority, satisfied with the compliance of Section 7(3) of the Code, appointed Mr. Chhedi Rajbhar as the IRP. 6. Declaration of Moratorium and Public Announcement: Upon admitting the application, the Adjudicating Authority declared a moratorium as per Sections 13 and 15 of the Insolvency & Bankruptcy Code, 2016. The moratorium prohibited the institution or continuation of suits, transferring or disposing of assets, foreclosure actions, and recovery of property by owners or lessors. The IRP was directed to make a public announcement and convene a meeting of the Committee of Creditors to evolve a resolution plan within 105 days from the insolvency commencement date. Conclusion: The application filed by the FCs under Section 7 of the Insolvency & Bankruptcy Code, 2016, was admitted, initiating the CIRP against the CD. The Adjudicating Authority declared a moratorium, appointed Mr. Chhedi Rajbhar as the IRP, and directed compliance with the model timeline for CIRP. The matter was listed for a progress report on 12.04.2019, and certified copies of the order were to be issued to all concerned parties upon compliance with requisite formalities.
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