2019 (6) TMI 1196 - Tri - Insolvency and Bankruptcy

Initiation of Corporate Insolvency resolution process - section 7 of Insolvency Bankruptcy Code, 2016 - default in payment of outstanding dues - HELD THAT - In the absence of any representation from the Corporate Debtor even after providing sufficient opportunity for the same, it is not incorrect to say that the Corporate Debtor does not have anything in its defence, therefore, admits its liability. The Application under sub-section (2) of Section 7 of I B Code, 2016 is complete. The existing financial debt of more than rupees one lakh against the corporate debtor and its default is also proved. Accordingly, the petition filed under section 7 of the I B Code for initiation of corporate insolvency resolution process against the corporate debtor deserves to be admitted. Petition admitted - moratorium declared.

Summary

Issues:
1. Petition filed by Financial Creditor under Section 7 of Insolvency & Bankruptcy Code, 2016 against Corporate Debtor for initiating Corporate Insolvency Resolution Process (CIRP).

Detailed Analysis:

Issue 1: Petition under Section 7 of I&B Code
The petition, CP 1433/2017, was filed by Daimler Financial Services Private Limited, a Financial Creditor, against Digital Travels Private Limited, the Corporate Debtor, under Section 7 of the Insolvency & Bankruptcy Code, 2016. The Financial Creditor extended a loan to the Director of the Corporate Debtor, making them a co-borrower under a Loan-cum-hypothecation Agreement. The loan amount, terms, and repayment schedule were clearly outlined in the agreement. Despite multiple notices sent by the Petitioner regarding default in payments and outstanding dues, the Corporate Debtor failed to respond or settle the dues. The absence of representation from the Corporate Debtor led to the conclusion that they admitted liability. The Loan Agreement, Board Resolution authorizing the loan, and a statement of account provided by the Petitioner established the existence of debt and default in payments.

Conclusion:
The Tribunal found the application under Section 7 of the I&B Code to be complete, with the financial debt exceeding one lakh rupees against the Corporate Debtor and default being proven. Therefore, the petition for initiating the corporate insolvency resolution process against the Corporate Debtor was admitted. The Tribunal declared a moratorium under Section 14 of the I&B Code, prohibiting various actions against the Corporate Debtor, appointing an Interim Resolution Professional, and issuing consequential directions to ensure the resolution process proceeds smoothly. The public announcement of the insolvency resolution process was also mandated, and immediate communication of the order to the relevant parties was directed for compliance.