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2022 (11) TMI 1401 - Tri - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Debtor is a viable going concern - enough monthly revenues to make payment of dues - HELD THAT - The Corporate Debtor has monthly revenues of INR 120 Crores (net of GST) which shows that the Corporate Debtor is a viable going concern. Further the Corporate Debtor has repaid an amount of INR 16, 915 Crores between 2011 to August 2018 which clears that the position of the Corporate Debtor is reasonably healthy and is in a position to repay the sustainable debt. The Corporate Debtor has claims aggregating to INR 13, 393.83 Crores against Aircel entities. Further this Tribunal has directed to pay approx. INR 900 Crores to the Corporate Debtor same has been pending on appeal. Moreover the Corporate Debtor has to recover INR 49.84 Crores from Tata Teleservices Limited; INR 20.38 Crores from ATC and INR 351 from BSNL in pending arbitration proceeding. The amount received would be sufficient to pay the debt of the Petitioner. The ratio of the Vidarbha Industries 2022 (7) TMI 581 - SUPREME COURT is squarely applicable to the present case as the business of the Corporate Debtor is sustainable and it is a viable going concern under its current management and the overall financial health of the Corporate Debtor is not bad enough to be admitted under CIRP. Moreover the adjudicated and un-adjudicated claims of the Corporate Debtor are far more than the debt claimed in the present petition. So in view of Judgement of the Hon ble Supreme Court in Vidarbha Industries Power Limited Vs. Axis Bank Limited the present petition should be dismissed. Petition dismissed.
Issues Involved:
1. Authorization of the signatory to file the petition. 2. Alleged default and financial status of the Corporate Debtor. 3. Malicious intent and misuse of IBC provisions by the Petitioner. 4. Applicability of the Vidarbha Industries Power Limited judgment. Detailed Analysis: 1. Authorization of the Signatory to File the Petition: The Respondent challenged the petition on the grounds that it was filed by Amrit Ghose under a Power of Attorney dated 01.06.1999, which predated the IBC, 2016. The Respondent argued that only an "authorized person" as distinct from a "Power of Attorney Holder" can file an application under Section 7 of the IBC. The Tribunal did not express an opinion on the merit of this issue due to the dismissal of the petition on other grounds. 2. Alleged Default and Financial Status of the Corporate Debtor: The Financial Creditor claimed a default amounting to Rs. 646.38 crores. The Corporate Debtor argued that it had been servicing its debt and had repaid significant amounts (Rs. 16,915 crores between 2011 and August 2018). The Corporate Debtor's financial health was demonstrated by monthly revenues of Rs. 120 crores (net of GST) and a bank balance of Rs. 394.14 crores as of July 31, 2022. It had substantial claims against other entities (Rs. 13,393.83 crores against Aircel entities, Rs. 49.84 crores from Tata Teleservices, Rs. 20.38 crores from ATC, and Rs. 351 crores from BSNL) that could cover the debt claimed by the Petitioner. 3. Malicious Intent and Misuse of IBC Provisions by the Petitioner: The Corporate Debtor contended that the Petitioner acted fraudulently and maliciously, seeking to initiate CIRP without intent to resolve insolvency but rather to recover debt, which is impermissible under IBC. The Corporate Debtor cited various instances, including the Petitioner's failure to credit debt converted to equity and the arbitrary declaration of default despite the Corporate Debtor not defaulting under the SDR. The Tribunal aligned with the Corporate Debtor's view, noting that the initiation of CIRP would lead to value erosion and was not in line with the objectives of IBC. 4. Applicability of the Vidarbha Industries Power Limited Judgment: The Corporate Debtor relied on the Vidarbha Industries Power Limited judgment, which provides that the Adjudicating Authority has the discretion to reject an application under Section 7 of the IBC even if debt and default are established. The Tribunal agreed, noting that the Corporate Debtor's financial health, ongoing business viability, and substantial receivables justified the exercise of discretion to reject the petition. The Tribunal concluded that the Corporate Debtor was a viable going concern and that the petition was not in the best interest of value maximization or resolution. Conclusion: The Tribunal dismissed the petition CP(IB)/4541/2019, finding that the Corporate Debtor's financial health and ongoing viability, coupled with substantial receivables, did not warrant the initiation of CIRP. The Tribunal refrained from expressing an opinion on the authorization issue due to the dismissal of the main petition. The judgment underscored the discretionary power of the Adjudicating Authority to reject CIRP applications even when debt and default are established, aligning with the principles laid out in the Vidarbha Industries Power Limited case.
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