2021 (1) TMI 1147 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor has defaulted in paying dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - The Financial Creditor has established the debt and default through various documents filed along with the application. The application is, therefore, liable to be admitted Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Default in loan repayment by the Corporate Debtor.
2. Maintainability of the petition under Section 7 of Insolvency and Bankruptcy Code (IBC), 2016.
3. Limitation period for filing the petition.
4. Alleged hardships faced by the Corporate Debtor due to external factors.
5. Actions taken by the Financial Creditor and the Corporate Debtor's response.

Issue-wise Detailed Analysis:

1. Default in Loan Repayment by the Corporate Debtor:
The petition was filed by Punjab National Bank Limited, the Financial Creditor, stating that the Corporate Debtor defaulted in repaying an amount of ?144,02,51,063.09 as of 30.06.2019. The Corporate Debtor had availed various credit facilities, including term loans and bank guarantees, from Punjab National Bank and Punjab & Sindh Bank. Despite several reminders, the Corporate Debtor failed to repay the outstanding amounts, leading the Financial Creditor to issue a demand notice under Section 13(2) of the SARFAESI Act on 02.07.2016.

2. Maintainability of the Petition Under Section 7 of IBC, 2016:
The Corporate Debtor contended that the petition was not maintainable, arguing that the allegations made were false. However, the tribunal noted that the Financial Creditor had established the debt and default through various documents filed with the application. The Financial Creditor also filed written submissions stating that the Corporate Debtor had admitted to the sanction of loans and had only offered a One-Time Settlement (OTS) which was not accepted.

3. Limitation Period for Filing the Petition:
The Corporate Debtor argued that the petition was barred by limitation, claiming it was filed beyond the prescribed three-year period. The Financial Creditor's notice under Section 13(2) of the SARFAESI Act was issued on 02.07.2016, and the petition was filed on 17.07.2019, which the Corporate Debtor claimed was 108 days beyond the limitation period. The tribunal considered the arguments but ultimately found the petition to be within the permissible period.

4. Alleged Hardships Faced by the Corporate Debtor Due to External Factors:
The Corporate Debtor cited various hardships, including delays in project clearance by local authorities, a Public Interest Litigation (PIL) that stayed the project work, and site relocation issues. These factors, according to the Corporate Debtor, led to significant losses and delays in project completion. Despite these challenges, the Corporate Debtor had approached the consortium for additional term loans and had also requested an extension for project completion, which was not granted.

5. Actions Taken by the Financial Creditor and the Corporate Debtor's Response:
The Financial Creditor declared the Corporate Debtor's account as a Non-Performing Asset (NPA) on 29.05.2016 and later invoked the bank guarantee. The Corporate Debtor offered an OTS of ?100 Crores, later improved to ?115 Crores, and created an Escrow Account, but these proposals were not accepted by the Financial Creditor. The Corporate Debtor argued that the Financial Creditor had filed two separate cases for the same relief in different forums, causing severe hardship.

Judgment:
The tribunal admitted the petition under Section 7 of IBC, 2016, and declared a moratorium as per Section 14 of the Code. The tribunal appointed an Interim Resolution Professional and directed the public announcement of the Corporate Insolvency Resolution Process (CIRP). The order of moratorium would remain effective until the completion of CIRP or until the tribunal approves a resolution plan or passes an order for liquidation, whichever is earlier. The registry was instructed to send a copy of the order to the Registrar of Companies, Hyderabad, for updating the status of the Corporate Debtor.