2019 (12) TMI 1575 - 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 Financial Creditor has established beyond doubt that the loan was duly sanctioned and duly disbursed to the Corporate Debtor and that there has been default in payment of the Debt by the Corporate Debtor. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Application admitted - moratorium declared.

Summary

Issues:
- Initiation of Corporate Insolvency Resolution Process (CIRP) under section 7 of the Insolvency & Bankruptcy Code, 2016.
- Dispute regarding the nature of the debt and default by the Corporate Debtor.
- Verification of debt and interest amount.
- Appointment of Interim Resolution Professional (IRP) and initiation of moratorium under section 14 of the IBC.
- Compliance and communication directives post-admission of the petition.

Analysis:

Initiation of CIRP:
The Financial Creditor filed a Company Petition under section 7 of the IBC seeking to initiate CIRP against the Corporate Debtor. The Financial Creditor provided detailed information in Form 1, establishing the debt due and the default by the Corporate Debtor. The jurisdiction of the Tribunal was established based on the incorporation details of the Corporate Debtor.

Debt and Default Dispute:
The Financial Creditor advanced a loan to the Corporate Debtor, which the latter disputed as an advance for acquiring floor space index. The Financial Creditor reiterated the loan nature of the amount and demanded repayment with interest. Evidence, including a Recall and Demand Notice and bank statements, was presented to support the claim.

Verification of Debt and Interest:
The Tribunal verified the debt due from the Corporate Debtor, noting the principal amount and the contested interest charges. The definition of "Financial Debt" under the Code was referenced to establish the debt's commercial effect, irrespective of interest. The Resolution Professional was tasked with verifying the interest quantum based on both parties' accounts.

Appointment of IRP and Moratorium:
The Financial Creditor proposed an Interim Resolution Professional, whose appointment was approved by the Tribunal. A moratorium was initiated under section 14 of the IBC, halting legal actions against the Corporate Debtor and preserving its assets. Essential services supply was ensured during the moratorium.

Compliance and Communication Directives:
Various compliance measures were ordered post-admission of the petition, including the deposit of funds for public notice expenses, communication to relevant parties, and updating of corporate data with the Registrar of Companies. The management of the Corporate Debtor vested in the IRP during the CIRP period, with strict obligations on the officers and managers to cooperate.

This detailed analysis covers the key issues addressed in the judgment, outlining the legal proceedings and decisions made by the Tribunal in the matter.