2019 (7) TMI 105 - Tri - Insolvency and Bankruptcy

Admissibility of petition - initiation of Corporate Insolvency Resolution Process - default in repayment of principal amount and interest - existence of debt - HELD THAT - The Corporate Debtor has admitted the debt and its inability to service the debt by way of interest due to financial difficulty in its Affidavit dated 10.4.2019. It is stated in the Affidavit that the Corporate Debtor does not have funds to either pay the interest or the principal amount - the existence of debt and default is reasonably established as even admitted by the Corporate Debtor itself. 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 - the petition filed under section 7 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the corporate debtor deserves to be admitted. Petition admitted - moratorium declared.

Issues:
1. Initiation of Corporate Insolvency Resolution Process under section 7 of Insolvency & Bankruptcy Code, 2016.
2. Default in repayment of principal amount and interest by the Corporate Debtor.
3. Admittance of debt and inability to service it by the Corporate Debtor.
4. Appointment of Interim Resolution Professional.
5. Declaration of moratorium and consequential directions.

Analysis:

Issue 1: Initiation of Corporate Insolvency Resolution Process under section 7 of Insolvency & Bankruptcy Code, 2016.
The petition CP 4733/2018 was filed by ICICI Prudential Real Estate AIF I, a Financial Creditor, against Sunshine Housing & Infrastructure Private Limited, the Corporate Debtor, for default in repayment of the principal amount and interest. The petition was filed on 21.12.2018 under section 7 of the Insolvency & Bankruptcy Code, 2016. The Petitioner provided a statement showing the calculation of the amount due and payable as on the filing date.

Issue 2: Default in repayment of principal amount and interest by the Corporate Debtor.
The Petitioner invested a substantial amount in debentures of the Corporate Debtor, which was secured by Deeds of Guarantee and a mortgage. Despite sending a notice to the Corporate Debtor about the default, the Corporate Debtor admitted its inability to service the debt due to financial difficulty. The Corporate Debtor filed an Affidavit stating its incapacity to pay the interest or principal amount.

Issue 3: Admittance of debt and inability to service it by the Corporate Debtor.
The Corporate Debtor admitted the debt and its inability to service it in the Affidavit filed on 10.4.2019. The Corporate Debtor acknowledged the financial difficulty and lack of funds to fulfill the payment obligations towards the Petitioner.

Issue 4: Appointment of Interim Resolution Professional.
The Petitioner proposed the name of Mr. Rajendra M. Ganatra, a registered insolvency resolution professional, for appointment as the Interim Resolution Professional. The Bench found the application under section 7 of the I&B Code, 2016 to be complete, with proof of financial debt against the Corporate Debtor and its default. Consequently, the petition for the initiation of the corporate insolvency resolution process was admitted.

Issue 5: Declaration of moratorium and consequential directions.
The Bench admitted the petition and declared a moratorium under section 14 of the I&B Code. The order prohibited various actions against the Corporate Debtor, ensured the supply of essential goods or services, and appointed the Interim Resolution Professional. The moratorium would be in effect until the completion of the corporate insolvency resolution process or liquidation, as approved by the Bench.

This detailed analysis outlines the legal proceedings, facts, and outcomes of the judgment delivered by the National Company Law Tribunal, Mumbai Bench, in the case involving the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor.

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