2021 (9) TMI 1427 - 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 - threshold limit involved inthe appeal - time limitation - HELD THAT - It is noted that there is a debt which is more than threshold limit prescribed for initiation of insolvency proceedings under Section 7 of IBC, 2016. This debt has not been repaid, thus, the event of default has occurred. The debt is not barred by limitation. The application is otherwise complete and defect free. The Financial Creditors have proposed the name of Mr. Devart Rana, to act as IRP which is mandatory for an application filed under Section 7 of CODE and whose consent is on record. It is also noted that no material exists on record as regard to disciplinary proceedings, if any, being pending against such person. Application admitted - moratorium declared.

Summary

Issues Involved:
- Application filed under Section 7 of Insolvency & Bankruptcy Code, 2016 for default amount of Rs. 2,00,88,434/-
- Absence of reply or representation from the corporate debtor during the proceedings
- Consideration of debt exceeding the threshold limit for insolvency proceedings
- Appointment of Interim Resolution Professional (IRP) and initiation of Corporate Insolvency Resolution Process (CIRP)
- Implementation of moratorium under Section 14 of the Code
- Prohibition of suits or proceedings against the Corporate Debtor
- Continuation of essential goods or services supply during the Moratorium
- Duties and obligations of the IRP in managing the Corporate Debtor's operations
- Payment of advance fees to the IRP by Financial Creditors
- Communication and dissemination of the order to relevant parties
- Effective date of commencement of Corporate Insolvency Resolution Process
- Disposal of the application and scheduling of further proceedings

Detailed Analysis:

1. Application under Section 7 of IBC:
The application was filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, citing a default amount of Rs. 2,00,88,434/-. The financial creditors claimed this amount, including accrued interest, based on deposits made by them as per an order passed by SEBI.

2. Absence of Corporate Debtor Representation:
Despite multiple opportunities, the corporate debtor did not file a reply or attend the final hearing. Consequently, the proceedings proceeded in the absence of the corporate debtor.

3. Consideration of Debt Threshold:
Upon review, it was established that the debt exceeded the threshold limit required for initiating insolvency proceedings under Section 7 of the IBC, 2016. The debt remained unpaid, indicating the occurrence of a default event, which was not barred by limitation.

4. Appointment of IRP and CIRP Initiation:
The Financial Creditors proposed the appointment of Mr. Devart Rana as the Interim Resolution Professional (IRP), a mandatory requirement for applications under Section 7 of the Code. With no pending disciplinary proceedings against Mr. Rana, the Corporate Debtor was admitted into the Corporate Insolvency Resolution Process (CIRP).

5. Implementation of Moratorium and Prohibition of Suits:
The moratorium under Section 14 of the Code was enforced from a specified date until the completion of the CIRP or approval of a Resolution Plan. The order prohibited the institution or continuation of suits, proceedings, or actions against the Corporate Debtor.

6. Continuation of Essential Supplies:
During the Moratorium period, the supply of essential goods or services to the Corporate Debtor was to be maintained without interruption, with the Corporate Debtor required to assist the IRP effectively.

7. IRP Duties and Obligations:
The IRP was tasked with making a public announcement of the CIRP, calling for claim submissions, and performing various functions as outlined in the Code. All personnel associated with the Corporate Debtor were legally obligated to cooperate with the IRP.

8. Payment of Advance Fees to IRP:
The Financial Creditors were directed to pay an advance sum to the IRP against fees and expenses until the Committee of Creditors (COC) decided on the final fees.

9. Communication and Commencement of CIRP:
The Registry was instructed to disseminate the order to relevant parties promptly, and the commencement of the CIRP was deemed effective from the date of the order.

10. Disposal of Application and Future Proceedings:
The application was allowed and disposed of, with the matter scheduled for listing on a specified date for further proceedings.