2020 (4) TMI 314 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - The Financial Creditor has succeeded to making out a case for triggering the Corporate Insolvency Resolution Process. The material on record clearly goes to show that the Corporate Debtor had availed the loan facility and has committed default in the payment of the said debt amount. The applicant 'financial creditor' has placed on record evidence in support of the claim as well as to prove the default. The Corporate Debtor by its own admission in reply acknowledges the existence of financial debt. There is no bar for Financial Creditor from proceeding under the provisions of Code. There is no document placed on record by Corporate Debtor to show that payment of debt, as claimed by the applicant, is made or is not due and payable. The application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code. A default has occurred and debt has remained unpaid. Thus, the application warrants admission as it is complete in all respects and is admitted initiating CIRP as prescribed under the Code. Application admitted - moratorium declared.

Summary

Issues:
1. Application under section 7 of The Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Default in repayment of loan by the Corporate Debtor.
3. Evidence provided by the Financial Creditor to support the claim.
4. Acceptance of liability by the Corporate Debtor.
5. Admission of the application by the Tribunal.
6. Appointment of Insolvency Resolution Professional.
7. Direction for public announcement and moratorium.
8. Direction for deposit of funds by the Financial Creditor.
9. Communication of the order to relevant parties.

Issue 1: Application under section 7 of The Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
The application was filed by M/s Amritvani Exim Private Limited under section 7 of The Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process against M/s. Ajanta Offset Packaging Ltd. The Applicant claimed to be a 'financial creditor' and provided necessary documentation to support the application.

Issue 2: Default in repayment of loan by the Corporate Debtor.
The Applicant disbursed an unsecured loan to the Corporate Debtor, which the Corporate Debtor failed to repay fully. The default occurred on a specified date, and despite requests for confirmation of accounts and repayment, the Corporate Debtor did not fulfill its obligations.

Issue 3: Evidence provided by the Financial Creditor to support the claim.
The Financial Creditor submitted various documents, including RTGS request letters, money receipts, and correspondence between the parties, as evidence of the loan disbursed and the default in repayment by the Corporate Debtor.

Issue 4: Acceptance of liability by the Corporate Debtor.
The Corporate Debtor, in its reply, accepted its liability towards the Financial Creditor, acknowledging the existence of the financial debt. The technical objections raised by the Corporate Debtor were deemed insufficient to contest the application.

Issue 5: Admission of the application by the Tribunal.
After considering the submissions from both parties, the Tribunal concluded that the Financial Creditor had successfully demonstrated the default and the debt remaining unpaid. The application was found to be complete and in compliance with the provisions of the Code, leading to its admission for initiating the Corporate Insolvency Resolution Process.

Issue 6: Appointment of Insolvency Resolution Professional.
The Financial Creditor proposed the name of an Insolvency Resolution Professional who satisfied the requirements under the Code. The Tribunal directed the Interim Resolution Professional to make a public announcement regarding the admission of the application within a specified timeframe.

Issue 7: Direction for public announcement and moratorium.
Upon admission of the application, a moratorium was imposed on the Respondent, prohibiting certain actions as per the provisions of the Code. The Tribunal directed the Financial Creditor to deposit funds with the Interim Resolution Professional to cover necessary expenses during the process.

Issue 8: Direction for deposit of funds by the Financial Creditor.
The Financial Creditor was instructed to deposit a specified sum with the Interim Resolution Professional to meet expenses related to the insolvency resolution process. The amount was subject to adjustment by the Committee of Creditors and was to be paid back to the Financial Creditor as per the proceedings.

Issue 9: Communication of the order to relevant parties.
The Tribunal directed the registry to communicate the order to all concerned parties, including the Financial Creditor, the Corporate Debtor, the Interim Resolution Professional, and the Registrar of Companies, within a specified timeframe for necessary actions and updates.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal in the context of the application under the Insolvency and Bankruptcy Code, providing a comprehensive overview of the decision-making process and the directives issued for further proceedings.