2018 (5) TMI 2099 - 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 - The form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. It is satisfied that a default has occurred and the application under sub section 2 of 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 Involved:

1. Whether the petitioner qualifies as a financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Whether there was a default in payment by the corporate debtor.
3. Whether the application for initiating Corporate Insolvency Resolution Process (CIRP) is complete and in accordance with the prescribed rules.
4. Appointment and duties of the Interim Resolution Professional (IRP).
5. Declaration of moratorium and its implications.

Issue-wise Detailed Analysis:

1. Qualification as Financial Creditor:
The petitioner filed the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, claiming to be a financial creditor. The petitioner entered into a sale/purchase MOU on 11.10.2013 with the corporate debtor for the sale/purchase of constructed space, opting for an assured returns plan. The corporate debtor was to pay a monthly sum as assured returns, which it defaulted on since April 2016. The NCLAT in Nikhil Mehta & Sons (HUF) & Ors. vs. M/s. AMR Infrastructures Ltd. held that those committed to paying assured returns are covered by the expression 'financial creditor'. Thus, the petitioner qualifies as a financial creditor.

2. Default in Payment:
The corporate debtor stopped making the assured returns payments from April 2016. The petitioner provided detailed disbursement and default particulars, including the total disbursed amount of ?3,03,73,754 and the default amount of ?66,91,692 till January 2018. The corporate debtor failed to respond to demand notices sent by the petitioner on 25.01.2017 and 13.10.2017, confirming the default.

3. Completeness of Application:
The application was filed in the prescribed proforma under Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, read with Section 7 of the Code. The petitioner provided all necessary details, including the default particulars and proposed the name of Mr. Alok Kumar Kuchhal as the IRP. The Tribunal found the application complete and in compliance with Section 7(2) and Section 7(5) of the Code, thus satisfying the requirements for initiating CIRP.

4. Appointment and Duties of IRP:
Mr. Alok Kumar Kuchhal was appointed as the IRP with the registration number IBBI/IPA-002/IP-N00114/2017-18/10284. The IRP is directed to make a public announcement regarding the admission of the application under Section 7 of the Code and to perform duties as per Sections 15, 17, 18, 19, 20, and 21 of the Code. The IRP must act with utmost integrity, fairness, and independence, and all personnel connected with the corporate debtor are legally obligated to assist the IRP.

5. Declaration of Moratorium:
A moratorium was declared under Section 14 of the Code, prohibiting:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transferring, encumbering, or disposing of the corporate debtor's assets.
- Actions to foreclose, recover, or enforce any security interest.
- Recovery of any property occupied by the corporate debtor.
The moratorium does not apply to transactions notified by the Central Government or the supply of essential goods/services, which must continue during the moratorium period.

Conclusion:
The petition was admitted, and the CIRP was initiated against the corporate debtor. The IRP was appointed to manage the process, and a moratorium was declared to protect the corporate debtor's assets and ensure a fair resolution process. The office was directed to communicate the order to all relevant parties within three days.