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2019 (8) TMI 39 - Tri - Insolvency and BankruptcyMaintainability of petition - Initiation of Corporate Insolvency Resolution Process - default in repayment of amount - specific case of Financial Creditor is that the corporate debtor had paid only a sum of ₹ 1,60,00,000/- by way of instalments and there after committed default. If really corporate debtor paid over and above the sum of ₹ 1,60,00,000/- it could be proved through its accounts - HELD THAT - Financial Creditor relied on letter from M/s. Intercontinental Infrastructure Limited which is party to the MOU stating that corporate debtor has not paid any amount to this company and if payment is not made within 7 days by corporate debtor the MOU stands cancelled. No amount was paid by corporate debtor to Intercontinental Infrastructure Limited in terms of MOU. The said MOU is deemed to have been cancelled. Corporate debtor cannot take any protection under this MOU which was deemed to have been cancelled due to its own default. Mere issue of notice for arbitration which is not constituted then corporate debtor can t prevent Financial Creditor for initiating CIRP. The Financial Creditor has suggested the name of IRP who has filed consent in Form 2 and there are no disciplinary proceedings pending against proposed IRP - The Financial Creditor is able to establish debt which was due and default by corporate debtor which is ₹ 7, 88,15,181/- which includes interest. Petition admitted - moratorium declared.
Issues Involved:
1. Default in repayment of Inter-Corporate Deposit (ICD) 2. Extension of ICD agreement and terms of repayment 3. Alleged reconciliation of accounts and mismatch of payments 4. Validity and implications of the Memorandum of Understanding (MOU) 5. Invocation of Irrevocable Guarantee 6. Initiation of Corporate Insolvency Resolution Process (CIRP) Issue-wise Detailed Analysis: 1. Default in repayment of Inter-Corporate Deposit (ICD): The petitioner, M/s SEW Infrastructure Limited (Financial Creditor), filed a petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, against M/s Amrit Jal Ventures Private Limited (Corporate Debtor) for defaulting on repayment of ?7,88,15,181/-. The Corporate Debtor had borrowed ?4,00,00,000/- under an ICD Agreement dated 30.06.2011, with a repayment period of 12 months and an interest rate of 24% per annum, including a penal interest of 2% for delayed payment. The Financial Creditor claimed that the Corporate Debtor failed to repay the loan as per the agreed terms. 2. Extension of ICD agreement and terms of repayment: The Corporate Debtor requested an extension of the ICD up to 31.03.2015, which was mutually agreed upon in a revised ICD Agreement dated 13.12.2013. Under this revised agreement, the Corporate Debtor agreed to pay interest up to 11.10.2013 and thereafter at 24% per annum on the principal amount in two installments, the first due on 30.09.2014 and the second on 31.03.2015. The Financial Creditor provided evidence of the revised agreement and the terms of repayment. 3. Alleged reconciliation of accounts and mismatch of payments: The Corporate Debtor contended that there was a mismatch in the amounts paid and claimed that it had made payments over and above ?1,60,00,000/-. However, the Financial Creditor presented letters and evidence showing demands for repayment and efforts for reconciliation, including deputing an employee for account reconciliation. The Tribunal found no credible evidence from the Corporate Debtor to support the claim of payments beyond ?1,60,00,000/-. The Tribunal concluded that the alleged mismatch was an attempt to delay the proceedings. 4. Validity and implications of the Memorandum of Understanding (MOU): The Corporate Debtor referred to an MOU dated 20.05.2016, claiming it covered the amounts due under the ICD. However, the Financial Creditor presented a letter from M/s Intercontinental Infrastructure Limited, a party to the MOU, stating that the Corporate Debtor had not made any payments as per the MOU, leading to its cancellation. The Tribunal deemed the MOU cancelled due to the Corporate Debtor's default and held that it could not be used to prevent the initiation of CIRP. 5. Invocation of Irrevocable Guarantee: The Financial Creditor presented irrevocable guarantees executed by M/s Mahendra Investments Advisors Private Limited and Shri Mahendra Kumar Agarwal for the loan. The Corporate Debtor argued that no default had occurred to invoke these guarantees. However, the Tribunal found that the Corporate Debtor had defaulted on its repayment obligations, justifying the invocation of the guarantees. 6. Initiation of Corporate Insolvency Resolution Process (CIRP): The Tribunal found that the Financial Creditor had established the existence of a debt and default by the Corporate Debtor amounting to ?7,88,15,181/-, including interest. Consequently, the Tribunal admitted the petition under Section 7 of IBC, 2016, and declared a moratorium as per Section 14 of the Code. The Tribunal also appointed an Interim Resolution Professional (IRP) and directed the initiation of the Corporate Insolvency Resolution Process. Conclusion: The Tribunal admitted the petition filed by the Financial Creditor, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor and declared a moratorium, prohibiting the institution or continuation of suits or proceedings against the Corporate Debtor and other related actions. The Tribunal appointed Mr. T.V.L. Narasimha Rao as the Interim Resolution Professional to carry out the functions under the Insolvency & Bankruptcy Code.
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