2020 (3) TMI 1129 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - financial debt is barred by time limitation or not - HELD THAT - This Bench is of the view that the objections raised by the corporate debtor as regards to the authority for filing the petition under section 7 of the IBC and the financial debt being barred by limitation are not tenable. The financial creditor has placed on record the letter of authority issued in favour of Sh. P. Y. Jakkareddy, DGM, Corporation Bank and also the letters dated March 31, 2015 and February 13, 2018 clearly showing acknowledgment of debt by the corporate debtor within the limitation period, even if the date of default is considered as November 29, 2014 as pointed out by the corporate debtor. The financial creditor has established a default on the part of the corporate debtor in payment of their financial debt and succeeded in establishing a case for triggering the corporate insolvency resolution (CIR) process - The present petition being complete and having established the default in payment of the financial debt for the default amount being above ₹ 1,00,000, the petition is admitted in terms of section 7(5) of the IBC and accordingly, moratorium is declared in terms of section 14 of the Code.

Summary

Issues:
1. Initiation of corporate insolvency process under section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Validity of financial debt and default amount.
3. Authority for filing the petition under section 7 of the IBC.
4. Objections raised by the corporate debtor regarding the financial debt being barred by limitation.
5. Establishment of default in payment of financial debt by the corporate debtor.

Analysis:

Issue 1:
The petition was filed by Corporation Bank under section 7 of the IBC, 2016 to initiate the corporate insolvency process against the corporate debtor, M/s. Sharma Kalypso P. Ltd. The petitioner sought to establish the default on the part of the corporate debtor in payment of their financial debt.

Issue 2:
The financial creditor claimed a total loan amount of &8377; 71,62,70,000 to the corporate debtor. The total claim including interest was &8377; 88,25,77,012.26. Various documents were annexed as proof of the financial debt, including agreements and reports indicating default.

Issue 3:
The respondent-company raised objections regarding the authority for filing the petition under section 7 of the IBC. The financial creditor provided a letter of authority issued in favor of the authorized representative, establishing the necessary authorization for filing the petition.

Issue 4:
The corporate debtor contended that the financial debt was not due and raised issues of limitation regarding the default date. However, the bench found the objections regarding the financial debt being barred by limitation not tenable, as the financial creditor provided evidence of acknowledgment of debt within the limitation period.

Issue 5:
After hearing submissions from both parties, the bench concluded that the financial creditor had successfully established the default in payment of the financial debt by the corporate debtor. The petition was admitted under section 7(5) of the IBC, and a moratorium was declared under section 14 of the Code, imposing various prohibitions on actions against the corporate debtor.

The bench appointed an Interim Resolution Professional (IRP) and directed the financial creditor to deposit an amount with the IRP to meet immediate expenses. The application was admitted, and the moratorium came into effect from the date of the order. The registry was instructed to communicate the order to all relevant parties and forward a copy to the Insolvency and Bankruptcy Board of India (IBBI) for their records.