2018 (12) TMI 1967 - 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 - HELD THAT - The provisions of Section 7 (2) and Section 7 (5) of IBC have been complied with as discussed in detail in the case of ECL FINANCE LIMITED VERSUS DIGAMBER BUILDCON PVT LTD 2018 (11) TMI 1741 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI are complied with where it was held that It is evident from the record that the application has been filed on the Performa prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. We are satisfied that a default has occurred and the application under sub section 2 of Section 7 is complete. A conjoint reading of the aforesaid provision would show that form and manner of the application has to be the one as prescribed. It is evident from the record that the petition has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. We are satisfied that amount was duly disbursed and a default has occurred. The petition under sub section 2 of Section 7 is complete as no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Thus, the petition warrant admission. Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Quantification of total debt amount.
2. Declaration of Non-Performing Asset (NPA).
3. Variation in the amount of claim.
4. Settlement proposal between parties.
5. Compliance with Section 7 of the Insolvency and Bankruptcy Code (IBC).

Issue-wise Detailed Analysis:

1. Quantification of Total Debt Amount:
The Corporate Debtor argued that the Petitioner failed to quantify the total debt amount under Part-IV of Form-1. The Tribunal referred to the Supreme Court judgment in M/s. Innoventive Industries Limited v. ICICI Bank, which held that the adjudicating authority only needs to verify that a default has occurred based on records or evidence provided by the financial creditor. The Tribunal found that the Financial Creditor had provided sufficient documentation to prove that the financial debt was disbursed and that default had occurred multiple times, thus rejecting the Corporate Debtor's objection.

2. Declaration of Non-Performing Asset (NPA):
The Corporate Debtor claimed that the NPA declaration on 12.05.2016 was harsh and unreasonable as the account was regular until 30.03.2016. The Tribunal noted that the account turned NPA as per RBI guidelines, indicating that the Corporate Debtor had defaulted in repayment for 90 days. Therefore, the objection regarding the harshness of the NPA declaration was dismissed.

3. Variation in the Amount of Claim:
The Corporate Debtor pointed out discrepancies between the amount claimed in the application and the recall notice and argued that the Petitioner failed to set out the computation of the debt amount. The Tribunal cited its earlier judgment in Bank of India v. Tirupati Infraprojects Pvt. Limited, which stated that discrepancies in calculation do not materially affect the admission of the application. The Tribunal emphasized that once default is established and other requirements are met, the Insolvency Resolution Process must be triggered. The objection regarding discrepancies in the amount claimed was thus rejected.

4. Settlement Proposal Between Parties:
The Corporate Debtor mentioned that a settlement proposal was under consideration. The Tribunal detailed the timeline of hearings and noted that despite multiple adjournments to consider settlement proposals, no fruitful result was achieved. The Tribunal concluded that the objective of the Code is to resolve insolvency issues, which cannot be accomplished unless the petition is admitted. Therefore, the objection based on ongoing settlement discussions was dismissed.

5. Compliance with Section 7 of the Insolvency and Bankruptcy Code (IBC):
The Tribunal reviewed the compliance with Section 7 of the Code, noting that the petition was filed in the prescribed form and manner. It confirmed that the amount was disbursed, default had occurred, and no disciplinary proceedings were pending against the proposed Interim Resolution Professional (IRP). Consequently, the petition met the requirements for admission.

Conclusion:
The Tribunal admitted the petition and appointed Mr. Sanjay Gupta as the Interim Resolution Professional. It directed the IRP to make a public announcement regarding the admission and declared a moratorium as per Section 14 of the Code. The office was instructed to communicate the order to relevant parties and update the Master Data with the Registrar of Companies (ROC).