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2020 (3) TMI 30 - AT - Insolvency and BankruptcyAdmissibility of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - whether the Appellant i.e., Corporate Debtor has paid the debt prior to admission of Application under section 7 of IBC? - existence of debt and default or not - HELD THAT - Record shows that the Payments have been made by the Appellant/Corporate Debtor prior to the admission of the Application i.e., on 03.05.2019. Having made the payment prior to initiation of CIRP, we are of the view that the case of the Respondent/Applicant cannot be treated as a Financial debt and default, in view of no debt payable to the Financial Creditor. Even the Respondent/Applicant did not deny the receipt of the aforesaid amount of ₹ 1,50,17,770/-. Whilst it is stated that the said amount has not been paid towards their debt but it has paid because of criminal cases filed against Directors of Corporate Debtor Company. The Corporate Debtor is released from rigour of 'Corporate Insolvency Resolution Process - Appeal allowed.
Issues:
1. Adjudication of application under section 7 of Insolvency and Bankruptcy Code, 2016. 2. Default in loan repayment by the Corporate Debtor. 3. Allegations of cheque forgery and dishonor. 4. Payment of debt by the Corporate Debtor before the initiation of Corporate Insolvency Resolution Process (CIRP). Issue 1: Adjudication of application under section 7 of IBC The appeal was filed against the order admitting the application under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by the Adjudicating Authority. The Financial Creditor initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on a loan of ?41,90,000. Issue 2: Default in loan repayment by the Corporate Debtor The Adjudicating Authority admitted the application based on the loan reflected as Long Term Borrowing in the balance sheet of the Corporate Debtor and a written undertaking accepting the debt. The Corporate Debtor contended that the cheque issued for repayment was dishonored due to alleged forgery by the Financial Creditor. Issue 3: Allegations of cheque forgery and dishonor The Corporate Debtor claimed that the Financial Creditor forged the cheque and deposited it, leading to a criminal case. However, the Corporate Debtor made payments totaling ?1,50,17,700 before the admission of the application, which the Financial Creditor did not deny receiving. Issue 4: Payment of debt by the Corporate Debtor before the initiation of CIRP The Appellate Tribunal found that the Corporate Debtor had paid the debt before the initiation of CIRP, releasing them from the resolution process. The Tribunal concluded that there was no default as the debt was settled, and the Financial Creditor was directed to pay the CIRP costs and fees. The Tribunal, after analyzing the evidence and submissions, allowed the appeal, setting aside the impugned order and releasing the Corporate Debtor from the Corporate Insolvency Resolution Process. The Financial Creditor was held liable for the CIRP costs, and the management, assets, and records were to be handed over to the Corporate Debtor for independent functioning through its Board of Directors.
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