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2019 (1) TMI 1250 - Tri - Insolvency and BankruptcyCorporate insolvency process - existence of financial debt - Held that - Debt is to be qualified as Financial Debt as defined under section 5(8) of Insolvency & Bankruptcy Code, 2016. As a result, the Financial Creditor has filed this Application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Since this is a Petition of Financial Creditor , therefore, the Insolvency Process shall commence as prescribed under Section 7 of IBC, 2016. The occurrence of default is established. The Financial Debtor had failed to pay the amounts due. Having considered the totality of the facts and circumstances mentioned above that the Debt in question is a Financial Debt and that the occurrence of default is recognized, hence considering the state of affairs mentioned supra the Petition under consideration deserves to be Admitted . The Petitioner/Financial Creditor has proposed the name of the IRP has furnished the requisite Certificate on Form No.2 that no Disciplinary Proceedings is pending. On due consideration, the proposal of appointment of the IRP is hereby confirmed. Upon Admission of the Application and Declaration of Moratorium the Insolvency Process such as Public Announcement etc. shall be made immediately as prescribed under section 13 read with section 15 of the Code. The appointed IRP shall perform the duties as an Interim Resolution professional as defined under section 18 of the Code and inform the progress of the Resolution Plan and the compliance of the directions of this Order within 30 days to this Bench.
Issues Involved:
1. Preliminary Objection Regarding Pending Proceedings 2. Intervention Application by Nityank Infrapower & Multiventures Pvt. Ltd. 3. Allegations of Fraud and Collusion 4. Admission of the Main Petition under Section 7 of the Insolvency Code Issue-Wise Detailed Analysis: 1. Preliminary Objection Regarding Pending Proceedings: The petition was filed by M/s Invex Private Limited against M/s Dome-Bell Electronics under Section 7 of the Insolvency Code for a financial debt of ?30,68,78,974. During the hearing, an objection was raised by a senior counsel that another petition by Nityank Infra Power and Multiventures Pvt. Ltd. against the same corporate debtor was pending in another courtroom. The tribunal observed that litigants are expected to be just, fair, and truthful while representing a case by placing on record the complete information, especially if any case is sub-judice before any court of law. The tribunal directed the corporate debtor not to deal with any of its assets until further orders. 2. Intervention Application by Nityank Infrapower & Multiventures Pvt. Ltd.: An intervention application (MA 695/2018) was filed by Nityank Infrapower & Multiventures Pvt. Ltd., claiming to be a financial creditor of Dome-Bell Electronics. The intervener alleged that a fraudulent share pledge transaction was entered into by Invex Pvt. Ltd. in favor of Dome-Bell to defeat Nityank's legitimate claim. The intervener sought to be included in the proceedings or, alternatively, to restrain Dome-Bell from pledging shares to ECL Finance Ltd. The tribunal noted that the intervener failed to establish a direct nexus between its debt and the debt in question. The tribunal rejected the intervention application, stating that mere complexity of transactions does not constitute fraud and that the intervener was not entitled to a copy of the petition as they were not a party to the litigation. 3. Allegations of Fraud and Collusion: The intervener alleged that the petition filed by Invex Pvt. Ltd. was collusive and malicious, intended to defeat Nityank's claim. The tribunal emphasized that allegations of fraud are serious and require substantial evidence. The tribunal found that the financial debt in question was simple and straightforward, supported by bank transactions and ledger confirmations. The tribunal rejected the allegations of fraud and collusion, noting that the intervener failed to provide sufficient evidence to support their claims. 4. Admission of the Main Petition under Section 7 of the Insolvency Code: The tribunal examined the main petition filed by Invex Pvt. Ltd. and found that the financial debt of ?30,68,78,974 was established through various documents, including a demand promissory note, bank statements, and ledger confirmations. The tribunal concluded that the debt qualified as a "financial debt" under Section 5(8) of the Insolvency & Bankruptcy Code, 2016, and that the occurrence of default was established. The tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process (CIRP) against Dome-Bell Electronics. The tribunal appointed an Interim Resolution Professional (IRP) and declared a moratorium as prescribed under Section 14 of the Code, prohibiting the institution of any suit or parallel proceedings before any court of law and preventing the liquidation of the debtor's assets until the completion of the insolvency process. Conclusion: The tribunal dismissed the intervention application by Nityank Infrapower & Multiventures Pvt. Ltd., rejected the allegations of fraud and collusion, and admitted the main petition filed by Invex Pvt. Ltd. under Section 7 of the Insolvency Code, initiating the Corporate Insolvency Resolution Process against Dome-Bell Electronics.
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