2020 (10) TMI 1280 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT - In the present matter, this Adjudicating Authority finds the debt and default is admitted by the corporate debtor. Thus it is well established that there is the existence of debt and default on behalf of the corporate debtor - this Adjudicating Authority is of the view that the corporate debtor has acknowledged the debt on 28.04.2016, the letter acknowledgement is annexed as Annexure 22 of the petition as well as the accounts of the corporate debtor was declared NPA on 30.09.2016 and the present petition was filed before this Adjudicating Authority on 11.01.2019, thus it is found well within limitation, within three years from the date of acknowledgment of debt. This Adjudicating Authority finds that the petitioner succeeded in establishing that there is a debt and existence of default on behalf of corporate debtor and the application is complete in all respect. It is seen that the amount in default is in excess of the minimum threshold limit fixed under IBC - Further, as the date of default is 28.04.2016, it is much prior to the amendment made in Insolvency and Bankruptcy Code on 05th of June, 2020 whereby Sec 10A was inserted, thus the amendment made will not have any effect in the present petition. This adjudicating Authority is inclined to admit this petition and initiate CIRP of the Respondent Company - Petition admitted - moratorium declared.

Summary

Issues:
1. Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Existence of financial debt and default in payment by the corporate debtor.
3. Time-barred nature of the petition.
4. Admission of the petition and appointment of Interim Resolution Professional (IRP).

Issue 1: Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016:

The financial creditor, Corporation Bank, filed a petition under Section 7 of the Code against the corporate debtor, Emm Vee Infrastructures (India) Pvt. Ltd., seeking initiation of Corporate Insolvency Resolution Process due to the inability of the corporate debtor to liquidate its financial debt. The petition detailed the term loan facilities granted to the corporate debtor, the defaults in repayment, and the classification of accounts as NPA, leading to the demand for outstanding dues.

Issue 2: Existence of financial debt and default in payment by the corporate debtor:

The petition established the existence of financial debt through term loan facilities sanctioned to the corporate debtor, along with acknowledgments and guarantees provided by related individuals. The corporate debtor failed to maintain regular accounts, leading to the classification of accounts as NPA as per RBI guidelines. Despite a demand notice, the outstanding amount remained unpaid, indicating default by the corporate debtor.

Issue 3: Time-barred nature of the petition:

The corporate debtor argued that the proceedings were time-barred, citing the first default date as 08.08.2014. However, the financial creditor contended that the acknowledgment of debt on 28.04.2016 initiated a fresh limitation period. The Adjudicating Authority found the petition filed on 11.01.2019 to be within the limitation period, considering the acknowledgment date and the NPA declaration.

Issue 4: Admission of the petition and appointment of Interim Resolution Professional (IRP):

The Adjudicating Authority, following the criteria under Section 7(1) of the Code, admitted the petition as it established the debt and default by the corporate debtor. Referring to relevant legal precedents, the Authority confirmed the completeness of the application and the amount exceeding the minimum threshold limit under the IBC. The Authority initiated the Corporate Insolvency Resolution Process and declared a moratorium under Section 14 of the Code. The appointment of Mr. Manish Agarwal as the Interim Resolution Professional (IRP) was confirmed, directing necessary steps for resolution process compliance.

This detailed analysis of the judgment from the National Company Law Tribunal, Allahabad, showcases the legal proceedings and outcomes concerning the initiation of Corporate Insolvency Resolution Process and related aspects under the Insolvency & Bankruptcy Code, 2016.