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2020 (6) TMI 350 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - It is incumbent upon the Financial Creditor while filing this petition to place on record before this Authority, the Financial Contract' and demonstrate without any ambiguity from the financial contract, the amount disbursed as per the loan/debt, the tenure of the loan/debt, the interest payable and the conditions of repayment.ln the present case, it is evident that the Financial Creditor has placed on record the Board Resolution passed by the Corporate Debtor requesting for the Loan Amount of ₹ 50,00,000/- and has also attached the Promissory Notes, however, the Financial Creditor has failed to show that the amount has been disbursed by the Financial Creditor for time value of money and admittedly no loan agreement was entered into between the parties setting out the details of the tenure of the loan/debt, the interest payable and the conditions of repayment. On the other hand, it is assumed to be an oral loan agreement. It is an admitted fact that the Resolution Plan does not crystalize the amount that is due and payable to the Financial Creditor - the Resolution Plan has a saving Clause for the Financial Creditor i.e. Clause 4 which states that the Disputed Creditors, i.e. the Financial Creditor herein, shall be paid on the basis of the outcome of the adjudication of the legal proceedings. The claim of the Financial Creditor was rejected by the Resolution Professional at the first instance in its entirety and based on the list of admitted claim given by the Resolution professional, the Resolution Applicant has submitted the Resolution Plan to the Committee of Creditor and the same was also approved by this Tribunal, thereby the amount which is payable to be Financial Creditor has not been crystallized. The Financial Creditor ought to have approached the appropriate forum for the adjudication of the claim. However, the Financial Creditor is now trying to adjudicate the amount that is due and payable by the Corporate Debtor to the Financial Creditor by filing this Application and by agitating this issue once again before this Tribunal. Application dismissed.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). 2. Validity and recognition of the financial claim made by the Financial Creditor. 3. Admissibility of the claim under the approved Resolution Plan. 4. Jurisdiction of the Tribunal to adjudicate disputed debts. Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC: The Financial Creditor filed an application under Section 7 of the IBC, 2016, seeking to initiate the CIRP against the Corporate Debtor, declare a moratorium, and appoint an Interim Resolution Professional (IRP). The application was submitted in the prescribed format as per Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Financial Creditor claimed a sum of ?45,98,973/- including interest as the total debt due from the Corporate Debtor. 2. Validity and Recognition of the Financial Claim: The Financial Creditor argued that a loan of ?50,00,000/- was granted to the Corporate Debtor, with part payments made towards delayed interest and principal. Due to the Corporate Debtor's failure to make further payments, a winding-up notice was issued, and a Company Petition was filed before the Hon'ble Madras High Court. The Financial Creditor's claim was not recognized by the Resolution Professional during the CIRP, leading to the categorization of the claim as a "Disputed Claim" in the Resolution Plan. The Corporate Debtor, represented by the Resolution Applicant, contended that there was no debt due as per Section 3(11) of IBC, 2016, and any existing claims were barred by limitation. The Corporate Debtor argued that the Financial Creditor failed to substantiate its claim before the approval of the Resolution Plan and that the Tribunal had no jurisdiction to adjudicate disputed debts, which lie within the purview of the Civil Court. 3. Admissibility of the Claim under the Approved Resolution Plan: The Tribunal referred to the decision of the Hon'ble Supreme Court in the matter of Committee of Creditors of Essar Steel India Limited -Vs- Satish Kumar Gupta & Ors., which held that all claims must be submitted to and decided by the Resolution Professional. The Resolution Plan must provide a fresh slate for the successful resolution applicant, free from undecided claims. In this case, the Resolution Plan did not crystallize the amount due to the Financial Creditor, and the claim was categorized as "Disputed Creditors" to be paid based on the outcome of legal proceedings. 4. Jurisdiction of the Tribunal to Adjudicate Disputed Debts: The Tribunal emphasized that its proceedings are summary in nature and it cannot adjudicate disputed debts, which require detailed evidence and are within the jurisdiction of Civil Courts. The Financial Creditor failed to provide a "Financial Contract" demonstrating the disbursal of the loan amount, tenure, interest payable, and conditions of repayment, as required under Regulation 8 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Conclusion: The Tribunal dismissed the application filed by the Financial Creditor, stating that the Financial Creditor should seek recourse before other forums for the adjudication of the claim, subject to applicable laws. The dismissal was without costs, and the Tribunal reiterated that it cannot indulge in detailed evidence-taking as a Civil Court would.
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