2021 (3) TMI 1452 - Tri - Insolvency and Bankruptcy

Maintainability of section 7 application - initiation of CIRP - default in paying the financial debt - debt which is due and payable, is barred by limitation or not - HELD THAT - In view of the admission by the Corporate Debtor, there remains nothing further to be deliberated on. There is debt which is due and payable as it is not barred by limitation. The default has occurred in terms of provisions of Insolvency Bankruptcy Code, 2016. The application is otherwise complete and defect free. The name of the IRP has been proposed whose consent is on record at Annexure-'C', hence, we appoint the same person as IRP against him no disciplinary proceedings are pending - application admitted. The application filed under Section 7 of the Insolvency Bankruptcy Code, 2016 stands allowed.

Summary

Issues: Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on default in payment of financial debt.

In this judgment by the National Company Law Tribunal, Ahmedabad, the Financial Creditor filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016 against the Corporate Debtor for defaulting on a financial debt of Rs. 25,99,22,676. The agreement between the parties outlined the terms of a loan facility, including repayment and interest details. Despite partial repayments, a significant outstanding amount remained unpaid by the Corporate Debtor, leading to the application for CIRP. The Corporate Debtor admitted its inability to repay due to financial difficulties. The Tribunal found the application complete and devoid of defects, appointing the proposed Interim Resolution Professional (IRP) and acknowledging the admission of debt by the Corporate Debtor.

The Tribunal determined that the debt was due and payable, not barred by limitation, and that a default had occurred as per the provisions of the Insolvency & Bankruptcy Code, 2016. Consequently, the Tribunal decided to admit the application under Section 7 of the Code, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The order included directions for moratorium under Section 14(1) of the Code, prohibiting various actions against the Corporate Debtor, effective until the completion of the CIRP or approval of a Resolution Plan. The appointed IRP was tasked with specific functions under the Code, and the Financial Creditor was directed to provide an advance for the smooth conduct of the CIRP.

Additionally, the IRP was instructed to make a public announcement of the CIRP initiation, manage the Corporate Debtor as a going concern, and ensure the continuity of goods/services supply during the moratorium period. The Tribunal emphasized the duty of the IRP to protect and preserve the Corporate Debtor's property value and operations. The judgment concluded with directives for communication of the order to relevant parties and regulatory authorities, along with the disposal of the application in favor of the Financial Creditor.