2020 (4) TMI 150 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - main plea taken by the Appellant, Shareholder/Director of the 'Corporate Debtor' is that no opportunity was given to the Corporate Debtor to address arguments and impugned order of admission was passed on 08-11-2019 without hearing - HELD THAT - There is nothing on the record to suggest that Mr.Rajesh Narang ('Appellant herein) was not present on that date though, plea has been taken by one of the 'Shareholder' Director of the Corporate Debtor that none appeared for the Corporate Debtor. Accordingly, such plea is rejected - On merit also, we find that the total amount sanctioned disbursed in various tranches from 26-3-2016 to 13-2-2017 by the Financial Creditor and default amount was of ₹ 39,97,98,092.27/- In any case, the default amount exceeds ₹ 1 Lakh. Even on merit, we find no ground to interfere with the impugned order of admission dated 08-11-2019. Appeal dismissed.

Summary

Issues:
1. Admission of Application under section 7 of Insolvency and Bankruptcy Code, 2016 without hearing the Corporate Debtor.
2. Lack of opportunity given to the Corporate Debtor to address arguments before the order of admission.
3. Dispute regarding the authorized representative of the Petitioner.
4. Failure to comply with the format prescribed under Rule 4 of the Bankruptcy rules.
5. Alleged payment made without supporting documents.
6. Existence of a pre-existing dispute between the parties.
7. Calculation discrepancies and intention to create fictitious entries without consent.

Analysis:

1. The Financial Creditor filed an Application under section 7 of the Insolvency and Bankruptcy Code, 2016 for the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor. The Adjudicating Authority admitted the Application without giving the Corporate Debtor an opportunity to address arguments, which was the main plea raised by the Appellant, who is a Shareholder/Director of the Corporate Debtor.

2. Both parties, through their learned counsel, raised the issue that no opportunity was provided to the Corporate Debtor to present arguments before the admission order was passed. The Adjudicating Authority acknowledged the arguments presented by the Corporate Debtor's counsel, highlighting various grounds of opposition to the admission of the petition.

3. One of the disputes raised was regarding the authorized representative of the Petitioner lacking the requisite power to initiate the resolution process under section 7 of the Code. The Petitioner was also alleged to have failed to comply with the format prescribed under Rule 4 of the Bankruptcy rules, and to have made payments without proper supporting documentation.

4. Additionally, it was contended that there was a pre-existing dispute between the parties, with pending proceedings before various courts and forums. The calculation discrepancies and the alleged creation of fictitious entries without consent were also brought to light during the proceedings.

5. The judgment noted that there was no evidence to suggest the absence of the Appellant on the date of the hearing, despite claims made by a Shareholder/Director of the Corporate Debtor. The total default amount sanctioned and disbursed by the Financial Creditor was confirmed to exceed rupees thirty-nine crores, ninety-seven lakhs, ninety-eight thousand, ninety-two and twenty-seven paisa.

6. It was ultimately concluded that the default amount exceeded one lakh rupees, and no sufficient grounds were found to interfere with the impugned order of admission dated 08-11-2019. Consequently, the Appeal was dismissed, and no costs were awarded.