2019 (2) TMI 1041 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - default in repayment of financial debt - Held that - As a sequel to the aforesaid discussion and the material placed on record shows that applicant-financial creditor had disbursed the money to the respondent corporate debtor as consideration for purchase of a residential Apartment. Though a considerable long period has lapsed even the principal amount disbursed has not been repaid by the respondent corporate debtor. It is accordingly held that respondent corporate debtor has committed default in repayment of the outstanding financial debt which exceeds the statutory limit of rupees one Lakh. Thus, the application warrant admission as it is complete in all respects. Accordingly, in terms of Section 7(5)(a) of the Code, the present application is admitted.

Summary

Issues Involved:
1. Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Existence of a financial debt and default.
3. Compliance with procedural requirements under the Code.
4. Appointment of Interim Resolution Professional.
5. Declaration of moratorium.

Issue-wise Detailed Analysis:

1. Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The respondent opposed the application on multiple grounds, including the argument that there was no default under Section 3(12) of the Code and no debt due under Section 3(11). They also argued that the petitioner failed to attach necessary documents as per the Banker's Book Evidence Act, 1891. However, the Tribunal found that the application was complete and met the requirements of Section 7(2) of the Code, and the petitioner was deemed a 'financial creditor' under the amended definition in Section 5(8)(f) of the Code.

2. Existence of a financial debt and default:
The petitioner claimed to have purchased an apartment and paid ?72,20,852.61/- out of the total consideration of ?1,33,62,895/-. The respondent failed to deliver the apartment within the stipulated time and extended the delivery date unilaterally. The Tribunal concluded that the petitioner had disbursed money as consideration for the apartment, which constituted a financial debt. The respondent's failure to repay this amount or deliver the apartment constituted a default.

3. Compliance with procedural requirements under the Code:
The Tribunal examined the compliance with Section 7(2) and Section 7(5) of the Code, which require the application to be in the prescribed form and manner, and the satisfaction of the adjudicating authority regarding the occurrence of default. The Tribunal found that the application was filed in the prescribed proforma under Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, and was complete. There were no disciplinary proceedings pending against the proposed Interim Resolution Professional.

4. Appointment of Interim Resolution Professional:
The petitioner proposed the name of Mr. Prabhjit Singh Soni as the Interim Resolution Professional, and the Tribunal found that he met all the requirements under Section 7(3)(b) of the Code. Consequently, Mr. Soni was appointed as the Interim Resolution Professional.

5. Declaration of moratorium:
The Tribunal declared a moratorium under Section 14 of the Code, which included prohibitions on instituting or continuing suits against the corporate debtor, transferring or disposing of assets, and recovering property occupied by the corporate debtor. The Tribunal also directed the Interim Resolution Professional to make a public announcement regarding the admission of the application and to perform his duties as per the Code.

Conclusion:
The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiated the Corporate Insolvency Resolution Process against the respondent, appointed Mr. Prabhjit Singh Soni as the Interim Resolution Professional, and declared a moratorium. The Tribunal directed the Interim Resolution Professional to make a public announcement and perform his duties in accordance with the Code.