2019 (2) TMI 1974 - 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 - HELD THAT - It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. This Tribunal is satisfied that a default has occurred and the application under Section 7 is complete. The name of the IRP has been proposed and there are no disciplinary proceedings pending against the proposed Interim Resolution Professional. Petition admitted - moratorium declared.

Summary

Issues:
1. Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 for triggering Corporate Insolvency Resolution Process.
2. Dispute over repayment of principal amount and assured returns by the Corporate Debtor.
3. Allegations of default in delivering possession of allotted units within stipulated time.
4. Examination of provisions of Section 7 (2) and Section 7 (5) of the IBC.
5. Appointment of Interim Resolution Professional and declaration of moratorium.
6. Directions for the Interim Resolution Professional and Financial Creditor.

Analysis:
1. The petitioner, a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, alleging default in repayment of the principal amount and assured returns as per the MoU agreements.

2. The financial creditor claimed that despite receiving monthly assured returns, the Corporate Debtor failed to deliver possession of the allotted units within the agreed timeframe, leading to a dispute regarding the repayment of the debt. The Corporate Debtor denied the claims, stating that the principal amount along with interest had been repaid, supported by ledger accounts and bank statements.

3. The tribunal found merit in the financial creditor's claim of default, as the possession of units was not delivered within the stipulated time, leading to the application not being barred by limitation. The tribunal examined the provisions of Section 7 (2) and Section 7 (5) of the IBC to validate the completeness of the application and satisfaction of default criteria.

4. Subsequently, an Interim Resolution Professional was appointed, and a moratorium was declared in accordance with Section 14 of the Code, imposing restrictions on legal actions against the Corporate Debtor and asset disposal. Essential services to the Corporate Debtor were to be maintained during the moratorium period, and the Interim Resolution Professional was directed to adhere to the Code's provisions diligently.

5. The tribunal directed the Financial Creditor to deposit a specified sum with the Interim Resolution Professional to cover expenses related to the resolution process. The Financial Creditor was given a deadline for the deposit, with the amount subject to adjustment by the Committee of Creditors and refundable to the Financial Creditor as per the resolution process.

6. The tribunal communicated the order to the concerned parties and regulatory bodies, emphasizing the obligations of the Interim Resolution Professional and the need for cooperation from all stakeholders in the resolution process. Any violations or non-cooperation were subject to legal action, underscoring the importance of preserving the Corporate Debtor's assets and following the Code's provisions diligently.