2021 (9) TMI 1447 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT - This Bench did not find any reply filed by Corporate Debtor from the record. However, the Corporate Debtor submitted written argument/submission and also Sur-Rejoinder dated 12.04.2019. The contents and the substance of the written submissions and the sur-rejoinder are nothing but repetition. The Corporate Debtor both in the written submission and the Sur-Rejoinder raised several issues with regard to the status of account, withholding and misrepresentation of facts, delay in arranging funds and noncooperation by the Financial Creditor, violation of RBI guidelines/directives so on and so fore which are not at all relevant for the purpose of disposal of the above Company Petition. The Corporate Debtor paid an amount of 50,000/- on 13.10.2017 which was also confirmed by the Corporate Debtor through their reply dated 04.12.2017 raising objection to the possession notice issued by the Financial Creditor under SARFAESI Act. The Corporate Debtor also addressed letter dated 24.02.2016 confirming the LC outstanding dues and LG outstanding dues. The above Company Petition being filed on 31.10.2018 is well within limitation - the only legally sustainable plea of limitation raised by the Corporate Debtor in the sur-rejoinder and written submission is liable to be rejected and accordingly rejected. Upon perusing the material available on record, this bench is of the considered opinion that the Financial Creditor has successfully proved the existence of debt and default and the debt is also within limitation. The Financial Creditor has also suggested the name of proposed Interim Resolution Professional in part-3 of the Petition along with his consent letter in Form-2. Thus, the present Company Petition satisfies all the necessary legal requirements for admission. Petition admitted - moratorium admitted.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 based on a financial debt of Rs. 39,53,59,449.6.

Analysis:

Issue 1: Initiation of CIRP by Financial Creditor
The Union Bank of India, as the Financial Creditor, filed a Company Petition seeking to initiate CIRP against the Corporate Debtor, M/s Indian Transformers Co. Ltd., under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Financial Creditor provided various credit facilities to the Corporate Debtor, who failed to clear the outstanding dues, leading to the classification of the account as NPA. The Financial Creditor filed the Original Application for the claim amount, followed by the Company Petition for initiation of CIRP.

Issue 2: Legal Plea of Limitation
The Corporate Debtor raised several issues in their written submissions, including the status of the account, delay in arranging funds, and non-cooperation by the Financial Creditor. However, the Tribunal found that the only relevant legal plea to be considered was the plea of limitation. The Corporate Debtor's argument regarding violation of RBI guidelines and other issues were deemed irrelevant for the disposal of the Company Petition.

Issue 3: Decision on Limitation
The Tribunal examined the timeline of events, including the declaration of the account as NPA, restructuring of loan facilities, and subsequent payments made by the Corporate Debtor. The Tribunal noted that the Company Petition was filed within the limitation period, as confirmed by the debit balance confirmations and acknowledgments of debt by the Corporate Debtor. The plea of limitation raised by the Corporate Debtor was rejected, and the Tribunal found that the Financial Creditor had successfully proved the existence of debt and default within the limitation period.

Issue 4: Admission of Company Petition
After considering the submissions and evidence presented, the Tribunal concluded that the Company Petition satisfied all legal requirements for admission. The Financial Creditor had proven the debt and default within the limitation period, and a proposed Interim Resolution Professional was suggested. Therefore, the Tribunal ordered the initiation of CIRP against the Corporate Debtor and appointed an Interim Resolution Professional to oversee the process.

Conclusion:
The Tribunal admitted the Company Petition, ordered the initiation of CIRP against the Corporate Debtor, and appointed an Interim Resolution Professional. Various directions were issued regarding the moratorium period, management during CIRP, and communication of the order to relevant authorities. The legal plea of limitation raised by the Corporate Debtor was rejected, and the Financial Creditor's claim was upheld based on the evidence presented.