2020 (10) TMI 323 - Tri - Insolvency and Bankruptcy

Winding up of Respondent Company - section 433(e), section 433(f) and 434 of Companies Act, 1956 - HELD THAT - The Financial Creditor has established that the loan was duly sanctioned and duly disbursed to the Corporate Debtor but there has been default in payment of Debt on the part of the Corporate Debtor. The nature of Debt is a Financial Debt as defined under section 5(8) of the Code. It has also been established that admittedly there is a Default as defined under section 3(12) of the Code on the part of the Debtor - keeping the admitted facts in mind, it is found that the Financial Creditor has not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Applicant, we are of the conscientious view that this Petition deserves 'Admission'. Application admitted - moratorium declared.

Summary

Issues:
1. Transfer of Company Petition from High Court to NCLT under I&B Code.
2. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
3. Failure of Corporate Debtor to repay outstanding dues.
4. Efforts made by Financial Creditor for recovery.
5. Establishment of default in payment by Corporate Debtor.
6. Admission of the Application and appointment of Interim Resolution Professional.
7. Implementation of Moratorium and Public Announcement.
8. Duties of Interim Resolution Professional and compliance reporting.

Issue 1: Transfer of Company Petition from High Court to NCLT under I&B Code
The Company Petition was initially filed at the High Court of Kerala but was transferred to NCLT, Chennai, under the Companies (Transfer of Pending Proceedings) Rules, 2016. Subsequently, it was renumbered as an application under Section 7 of the I&B Code at the Kochi Bench of NCLT, following a series of procedural steps.

Issue 2: Application under Section 7 of the Insolvency and Bankruptcy Code, 2016
The Applicant filed an Application against the Corporate Debtor under Section 7 of the I&B Code, seeking to initiate Corporate Insolvency Resolution Process. The registry issued notices to the Corporate Debtor, but they were returned as unserved, leading to the application being reserved for ex-parte orders.

Issue 3: Failure of Corporate Debtor to repay outstanding dues
The Corporate Debtor failed to repay a term loan, leading to arrears and subsequent actions by the Financial Creditor, including revenue recovery proceedings. The outstanding amount due to the Financial Creditor was detailed, indicating default in repayment by the Corporate Debtor.

Issue 4: Efforts made by Financial Creditor for recovery
The Financial Creditor undertook various steps for recovery, including issuing notices, attaching properties, and initiating legal proceedings within the limitation period. The history of actions taken by the Financial Creditor to recover the outstanding dues was presented in detail.

Issue 5: Establishment of default in payment by Corporate Debtor
Upon review of facts and submissions, it was established that there was a default in payment of debt by the Corporate Debtor, qualifying as a "Financial Debt" under the I&B Code. The Financial Creditor had not received the outstanding debt, meeting the criteria for admission of the Petition.

Issue 6: Admission of the Application and appointment of Interim Resolution Professional
Based on the established default and completion of formalities under the I&B Code, the Tribunal admitted the Application. An Interim Resolution Professional was appointed to oversee the Corporate Insolvency Resolution Process, with provisions for moratorium and public announcement.

Issue 7: Implementation of Moratorium and Public Announcement
The Moratorium under Section 14 of the Code was implemented upon admission of the Application, ensuring continuity of essential supplies to the Corporate Debtor. The Interim Resolution Professional was tasked with performing duties under the Code and providing progress updates to the Bench.

Issue 8: Duties of Interim Resolution Professional and compliance reporting
The Interim Resolution Professional was directed to fulfill duties as per the Code, inform progress on the Resolution Plan, and comply with the Tribunal's directions within the specified timeline. Communication of the order to involved parties and regulatory authorities was mandated for compliance and reporting purposes.