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2021 (2) TMI 785 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - existence of debt and dispute or not - HELD THAT - Ample opportunity was given to the Corporate Debtor to file its reply. Not only the Corporate Debtor failed to file a reply but also failed to make representation before this Bench. Therefore, the Corporate Debtor was set ex-parte vide an order of this Bench dated 05.12.2019. Later the constitution of the Bench was changed and the Corporate Debtor again was given an opportunity to be present before this Bench and make representation if any on their behalf and the corporate debtor did not chose to appear. Heard the counsel appearing for the Financial Creditor and perused the documents submitted by him. The counsel for the Financial Creditor successfully demonstrated and proved the existence of debt and default. Financial Creditor also mentioned the name Mr. Mukesh Kumar Gupta as IRP and enclosed the consent letter given by the proposed IRP in Form-2. The debt is within limitation. Thus, the Company Petition satisfies all the requirements for admission. Since the Corporate Debtor remained ex-parte even without filing any reply, the claim of the applicant remained unchallenged. The initiation of Corporate Insolvency Resolution Process (CIRP) is ordered against Shakti Motors Automobiles Private Limited. - petition allowed.
Issues Involved:
1. Application for Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code. 2. Default in payment by Corporate Debtor to Financial Creditor. 3. Financial contribution and obligations under the agreement. 4. Legal notices issued for outstanding amounts. 5. Failure of Corporate Debtor to repay the financial debt. 6. Jurisdiction of the National Company Law Tribunal. 7. Ex-parte proceedings due to non-appearance and non-filing of reply by Corporate Debtor. 8. Appointment of Interim Resolution Professional. 9. Directions regarding CIRP process, moratorium, and management during CIRP. Analysis: 1. The Company Petition was filed by PPG Asian Paints Private Limited, a Financial Creditor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Shakti Motors Automobiles Private Limited, the Corporate Debtor, for defaulting on payments as per Section 7 of the Insolvency and Bankruptcy Code (IBC). The Financial Creditor alleged that the Corporate Debtor failed to make payments for invoices raised, leading to the initiation of the CIRP. 2. The Financial Creditor, a private limited company engaged in manufacturing and distribution of paints, had entered into a financial contribution agreement with the Corporate Debtor, a private limited company involved in automotive sales and services. The agreement involved a financial contribution of ?22,50,000 towards sales promotions and procurement of specialized equipment for automotive painting facilities. 3. The agreement detailed the financial contribution as a financial debt, with obligations and security recorded. The Corporate Debtor was obligated to procure products annually for four years, but failed to do so, leading to defaults. Legal notices were issued for the outstanding amount of ?35,55,930, including the principal, interest, and GST. 4. Despite the legal notices and defaults, the Corporate Debtor did not repay the financial debt, prompting the Financial Creditor to file for CIRP under the IBC. The Tribunal found the debt to be within the definition of 'financial debt' under the IBC, and as the Corporate Debtor did not challenge the claim, the Company Petition was allowed. 5. The Tribunal, upon considering the arguments and documents, ordered the initiation of CIRP against the Corporate Debtor. An Interim Resolution Professional was appointed, and directions were given regarding the CIRP process, moratorium, management during CIRP, and communication of the order to relevant authorities. The Tribunal also prohibited legal actions against the Corporate Debtor during the CIRP period and ensured continuity of essential supplies to the Corporate Debtor.
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