2019 (12) TMI 650 - Tri - Insolvency and Bankruptcy

Admissibility of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - compliance with Section 7(5)(a) of the Code or not - existence of debt and default or not - application under Section 7(2) is complete or not - disciplinary proceedings pending against the proposed resolution professional or not - HELD THAT - The bouncing of the cheques on the reason albeit of account closed and the non-payment of the amounts thereafter clearly evidences the occurrence of default - The application is filed in the prescribed Form 1 and no defects therein have been brought out by the learned counsel for the corporate debtor. The application under Section 7(2) is therefore, treated as complete - the proposed IRP Shri Amit Gupta has filed Form No.2 (Annexure A-9 of the petition). The IRP has stated therein that there are no disciplinary proceedings pending against him with the Board or ICSI Insolvency Professionals Agency. The conditions provided for in Section 7(5)(a) of the Code are thereby satisfied - the application for initiation of CIRP in the case of the corporate debtor M/s C C Towers Ltd admitted - Directions for moratorium and appointment of IRP are given. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Default in payment by the corporate debtor
3. Validity and completeness of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016
4. Appointment of Interim Resolution Professional (IRP)
5. Declaration of moratorium

Issue-Wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed by Mrs. Kussum Chadha Ahuja on behalf of herself and as Power of Attorney holder for Shri Surender Mohan under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP against M/s C&C Towers Ltd. The petition was filed in compliance with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Tribunal confirmed its jurisdiction over the matter as the registered office of the corporate debtor is located in Gurugram, Haryana.

2. Default in Payment by the Corporate Debtor:
The corporate debtor had launched a "buy back" scheme involving assured returns and refund with premium after a specified period. Financial Creditor No.1 entered into an agreement on 09.05.2016, investing ?40,00,000 with an assurance of monthly returns and a total refund of ?46,40,000 after 24 months. Financial Creditor No.2 entered into a similar agreement on 06.07.2016, investing ?10,00,000 with an assurance of monthly returns and a total refund of ?11,60,000 after 24 months. The corporate debtor defaulted on these payments, and the cheques issued for refunds were dishonoured with the remark "account closed."

3. Validity and Completeness of the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The application was filed in Form 1, signed, and verified by Mrs. Kussum Chadha Ahuja. The Tribunal confirmed that the application was complete and in order, as no defects were pointed out by the corporate debtor's counsel. The Tribunal also verified that there were no disciplinary proceedings pending against the proposed IRP, Mr. Amit Gupta.

4. Appointment of Interim Resolution Professional (IRP):
Mr. Amit Gupta was proposed as the IRP, and his Form No. 2 was submitted, confirming no pending disciplinary proceedings against him. The Tribunal appointed Mr. Amit Gupta as the IRP, directing him to take control of the corporate debtor's management and assets, prepare an inventory of assets, and make a public announcement of the CIRP initiation. The IRP was also instructed to constitute a Committee of Creditors and submit regular progress reports to the Tribunal.

5. Declaration of Moratorium:
The Tribunal declared a moratorium in terms of Section 14(1) of the Code, which included:
(a) Suspension of suits or proceedings against the corporate debtor.
(b) Prohibition on transferring or disposing of the corporate debtor's assets.
(c) Prevention of actions to foreclose or enforce security interests.
(d) Protection of the corporate debtor's property from recovery by owners or lessors.

The moratorium would remain effective until the completion of the CIRP or until a resolution plan is approved or liquidation is ordered. The Tribunal also directed the continuation of essential goods or services to the corporate debtor during the moratorium period.

Conclusion:
The Tribunal admitted the application for initiation of CIRP against M/s C&C Towers Ltd., declared a moratorium, and appointed Mr. Amit Gupta as the IRP. The Tribunal's decision was based on the verified default by the corporate debtor, the completeness of the application, and the absence of any objections from the corporate debtor regarding the initiation of CIRP.