2021 (3) TMI 863 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - It is clear that on the request of the Corporate Debtor, the Financial Creditor had sanctioned the loan, which was duly disbursed to the Corporate Debtor in its Bank Account and was duly acknowledged. It is also not denied that the default has not occurred resulting in triggering the process of insolvency. Section 7(1) of the Code expressly envisages a default is in respect of financial debt, that is owed to any financial creditor by the Corporate Debtor. The Financial Creditor has made this application in the prescribed form and manner. This Adjudicating Authority has to simply satisfy itself that the default has actually occurred. Even, though the Corporate Debtor has the right to point out that the default has not occurred, but there is no such plea in its affidavit in opposition, which tantamounts to a clear cut admission that the default had occurred. The application of the Financial Creditor being complete in all respects and there being no denial of the default having taken place in repayment of the debt due to the Financial Creditor - Application admitted - moratorium declared.

Issues Involved:
1. Grant and disbursement of loan facilities by the Financial Creditor.
2. Default in repayment by the Corporate Debtor.
3. Evidence of default and submission of documents.
4. Corporate Debtor's response and attempts at resolution.
5. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
6. Declaration of moratorium and appointment of Interim Resolution Professional (IRP).

Detailed Analysis:

1. Grant and Disbursement of Loan Facilities by the Financial Creditor:
The Financial Creditor, ICICI Bank Limited, granted and disbursed a cumulative Rupee term loan facility of ?50,00,00,000/- to the Corporate Debtor, McNally Sayaji Engineering Limited. The loan was divided into two facilities: ?25,00,00,000/- each, disbursed on June 18, 2015, and June 27, 2015, respectively. Additionally, a Working Capital facility was provided and renewed from time to time. The total amount in default for Facility I was ?14,50,49,157.39, for Facility II was ?14,50,75,502/-, and for the Working Capital Facility was ?45,84,41,659.02 as of December 31, 2019.

2. Default in Repayment by the Corporate Debtor:
The Corporate Debtor defaulted on the repayment of the loan facilities on January 28, 2019, and January 31, 2019. The Financial Creditor provided a summarized computation of the amount of default and the days of default, which were 334 days for Facilities I and II and 337 days for the Working Capital Facility as of December 31, 2019.

3. Evidence of Default and Submission of Documents:
The Financial Creditor secured the loan by executing various documents and securities. They submitted a summarized computation of the default amount and filed various supporting documents (Annexures 'A' to 'J'). The application was complete in all respects per the provisions of the Insolvency and Bankruptcy Code (IBC), 2016, and no limitation issue was involved. The CIBIL Report reflected the outstanding amount as "sub-standard."

4. Corporate Debtor's Response and Attempts at Resolution:
The Corporate Debtor, through its Chief Financial Officer, submitted an affidavit stating that it had been pursuing several debt restructuring initiatives. A revised Resolution Plan dated August 14, 2020, was discussed among the lenders in September 2020. However, due to the Covid-19 pandemic, the Resolution Plan could not be implemented. The Corporate Debtor emphasized that it was a running company with over 1000 employees and was actively negotiating with the Financial Creditor and other lenders.

5. Admissibility of the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Financial Creditor proved its case with various documents, showing that the default occurred on January 28, 2019, and January 31, 2019. The Corporate Debtor's arguments were deemed vague and unreasonable. The application was complete in all respects, and there was no denial of the default by the Corporate Debtor, which amounted to an admission of the default.

6. Declaration of Moratorium and Appointment of Interim Resolution Professional (IRP):
The Tribunal admitted the application under Section 7 of the IBC, 2016, and declared a moratorium as per Sections 13 and 15 of the IBC, 2016. The moratorium prohibited the institution of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. Mr. Jitendra Lohia was appointed as the IRP, and the Financial Creditor was directed to deposit ?2,00,000/- with the IRP. The IRP was tasked with convening a meeting of the Committee of Creditors and identifying a prospective Resolution Applicant within 105 days from the insolvency commencement date.

Orders:
1. The application under Section 7 of the IBC, 2016, was admitted.
2. A moratorium was declared as per Sections 13 and 15 of the IBC, 2016.
3. The IRP was appointed and directed to make a public announcement and call for claims.
4. The Financial Creditor was directed to deposit ?2,00,000/- with the IRP.
5. The matter was listed for filing the progress report on 27/04/2021.
6. Certified copies of the order were to be issued to all concerned parties upon compliance with requisite formalities.

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