2021 (1) TMI 714 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - There is no dispute as regards to the sanction and disbursement of loan by the Financial Creditor to the Corporate Debtor. It is also not in dispute that such outstanding debt is due and payable, both in law and in-fact. There is a default in repayment of the same. Thus, the application under Section 7 of the Insolvency Bankruptcy Code, 2016 is liable to be admitted, as it meets the basic ingredients thereof. The Application is complete in all respects and meets requirements of Regulations made under Insolvency Bankruptcy Code, 2016. The Application filed under Section 7 of the Insolvency Bankruptcy Code, 2016 is defect free and is admitted.

Summary

Issues:
Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor due to default in repayment of outstanding debt.

Analysis:
The Financial Creditor filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016 against the Corporate Debtor, citing a default in payment of &8377; 14,23,83,521/-, with the default date mentioned as 1st July, 2018. The Financial Creditor had sanctioned and disbursed loan facilities to the Corporate Debtor, who failed to repay as per the agreed terms and conditions, leading to the default. Despite reminders, the Corporate Debtor did not clear the outstanding dues, resulting in the account being classified as NPA. Arbitration proceedings were initiated by the Financial Creditor, and an Interim Order was passed to freeze the Bank Accounts of the Corporate Debtor. The Financial Creditor submitted a foreclosure statement showing the outstanding amount, leading to the application for CIRP.

The Tribunal reviewed the application, noting that there was no dispute regarding the loan disbursement, outstanding debt, and default in repayment. The Tribunal found the application complete and meeting the requirements of the Insolvency & Bankruptcy Code, 2016. Consequently, the Tribunal admitted the application and commenced the CIRP. An Interim Resolution Professional (IRP) was proposed by the Financial Creditor, and the Tribunal appointed Mr. Sajjan Kumar Dokania as the IRP. The moratorium was declared, prohibiting various actions against the Corporate Debtor, and the IRP was directed to manage the operations of the Corporate Debtor as a going concern. The Financial Creditor was instructed to provide an advance to the IRP for the smooth conduct of the CIRP.

In conclusion, the Tribunal admitted the application under Section 7, appointed an IRP, declared a moratorium, and issued directives for the management of the Corporate Debtor during the CIRP. The matter was scheduled for further consideration on a specified date.