2019 (1) TMI 1960 - 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 Corporate Debtor has defaulted in making payments of the outstanding dues to the tune of ₹ 23,55,81,656.54p as on 31.12.2017. The calculation of interest can be seen from the documents placed at pages 193 A, 193 B and 193 C of the typed set filed with the Application. The Financial Creditor further supported the claim with the Statement of Account, which is placed at pages 194 to 316 of the typed set filed with the Application. It is reiterated by the Learned Counsel for the Financial Creditor that the Corporate Debtor has filed Balance Sheet for the year 2011-2012, and thereafter, no Balance Sheet has been filed - the Financial Creditor has initiated SARFAESI proceedings by issuing a Demand Notice dated 06.06.2011 under Section 13(2) of the SARFAESI Act, 2002 and followed by the Possession Notice dated 15.09.2011 under Section 13(4) of the SAPFAESI Act against the Corporate Debtor, copies of which are placed at pages 317 to 321 of the typed set filed with the Application. The Learned Sr. Counsel for the Financial Creditor has submitted that the Financial Creditor has also filed Original Application No. 376/2013 against the corporate Debtor before the Debts Recovery Tribunal at Ernakulam, which is pending. The documentary evidence which is placed on the case file is sufficient in order to ascertain the existence of a default on the part of the corporate Debtor. Therefore, in the light of the facts and circumstances recorded, and the legal position stated, the Financial Creditor has fulfilled all the requirements of law, for admission of the Application filed under Section 7 of the I B Code, 2016 and proposed the name of the IRP. Hence, the Application stands admitted. The commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted - moratorium declared.

Summary

Issues involved:
Adjudication of insolvency application under Section 7 of the Insolvency and Bankruptcy Code, 2016; Jurisdiction of the National Company Law Tribunal; Default in payment by the Corporate Debtor; Claim of outstanding dues by the Financial Creditor; Admission of application and appointment of Interim Resolution Professional (IRP); Declaration of moratorium.

Analysis:

1. The case involves the adjudication of an insolvency application filed by a Financial Creditor against a Corporate Debtor under Section 7 of the Insolvency and Bankruptcy Code, 2016. The prayer seeks the initiation of the Corporate Insolvency Resolution Process, declaration of moratorium, and appointment of an Interim Resolution Professional (IRP).

2. The Corporate Debtor failed to make payments despite outlining a settlement proposal, leading to delays in the proceedings. The Authority noted the lack of constructive proposals from the Corporate Debtor for settlement.

3. A jurisdictional issue was raised by the Counsel for the Corporate Debtor, contending that the matter falls under the NCLT, Cochin Bench. However, since the Cochin Bench was non-functional at the time of filing and all matters were being adjudicated by NCLT, Chennai Bench, the objection was deemed meritless.

4. The Financial Creditor claimed outstanding dues of a significant amount against the Corporate Debtor, supported by documentary evidence and a Statement of Account.

5. The Financial Creditor detailed the facilities availed by the Corporate Debtor from a bank, including cash credit, bill discounting, bank guarantee limits, and term loans for vehicle purchase, along with related agreements and promissory notes.

6. Despite admitting liability in past communications, the Corporate Debtor failed to service the loans, leading to a default in payments. The debt was assigned to the Financial Creditor, who initiated SARFAESI proceedings and filed an Original Application before the Debts Recovery Tribunal.

7. The Corporate Debtor's defense was limited, with an admission of liability in an affidavit. The documentary evidence presented established the default by the Corporate Debtor, fulfilling the legal requirements for admission of the insolvency application.

8. The Tribunal admitted the application, ordered the commencement of the Corporate Insolvency Resolution Process, and appointed an Interim Resolution Professional. A moratorium was declared to prohibit actions against the Corporate Debtor's assets during the resolution process.

9. The appointed IRP was directed to take charge of the Corporate Debtor's management, make a public announcement, and call for claim submissions. The Registry was instructed to communicate the order to the parties involved promptly.