2020 (11) TMI 1067 - 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 - In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the Corporate Debtor committed default in paying the financial debt to the Applicant. On perusal of record, it is held that there is existence of default and that the application under Section 7(2) of the Code is also complete in all respect - In the instant case, the documents produced by the Financial Creditor clearly establish the debt . Section 13 (2) Notice issued by the Financial Creditor clearly indicates that entire debt was recalled. There is a default on the part of the Corporate Debtor in payment of the financial debt . There is no dispute in the case that the petitioner is the financial creditor. The application is also furnished in the prescribed form - 1 of the Rules and the prescribed fee has also been paid. Along with the application, the applicant has proposed the name of the Interim Resolution Professional namely Mr. Naresh Sheth. The petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted - Petition admitted - moratorium declared.

Summary

Issues:
1. Application under Section 7 of The Insolvency and Bankruptcy Code, 2016 seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code.
2. Debt owed by the corporate debtor and default in repayment.
3. Existence of default and completeness of the application under Section 7(2) of the Code.
4. Appointment of Interim Resolution Professional and fulfillment of requirements under Section 7 of the Code.
5. Admission of the petition and declaration of moratorium.

Issue 1: Application under Section 7 of The Insolvency and Bankruptcy Code, 2016 seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code.

The petition was filed under Section 7 of the Code seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) against the corporate debtor. The applicants, registered private limited companies, had granted a total amount to the corporate debtor, which was due and payable. The financial creditor filed the Insolvency Resolution Application due to the corporate debtor's inability to repay the outstanding debt, citing defaults in payment.

Issue 2: Debt owed by the corporate debtor and default in repayment.

The records indicated that the corporate debtor had committed defaults in repayment of the debt owed to the financial creditors. The debt owed and the defaults committed were not disputed by the corporate debtor in their objections. The corporate debtor's financial stress and acknowledgment of defaults highlighted the seriousness of the situation. The application was filed within the limitation period, and the corporate debtor failed to provide a bona fide defense against the claim made by the financial creditor.

Issue 3: Existence of default and completeness of the application under Section 7(2) of the Code.

The Adjudicating Authority found evidence to substantiate the claim of default by the corporate debtor in payment of the amount due to the financial creditor. The documents submitted by the financial creditor established the existence of the debt, and the Notice issued clearly indicated the default in payment of the financial debt. The application was complete, and the appointment of the Interim Resolution Professional was in compliance with the prescribed rules.

Issue 4: Appointment of Interim Resolution Professional and fulfillment of requirements under Section 7 of the Code.

The Adjudicating Authority appointed an Interim Resolution Professional after verifying the completeness of the application and the absence of pending disciplinary proceedings against the proposed professional. The financial creditor had fulfilled all the requirements under Section 7 of the Code, leading to the admission of the petition.

Issue 5: Admission of the petition and declaration of moratorium.

The petition was admitted, and a moratorium was declared, prohibiting various actions against the corporate debtor as per Section 14 of the Code. The order of moratorium was to remain in effect until the completion of the corporate insolvency resolution process or until further orders were passed by the Bench. The supply of goods and essential services to the corporate debtor was to continue during the moratorium period, except for transactions notified by the Central Government.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the decision rendered by the National Company Law Tribunal in Ahmedabad.