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2021 (3) TMI 978 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Financial Creditor or not - pre-existing debt and dispute or not - HELD THAT - The grounds stated by corporate debtor will not prevent the financial creditor from initiating CIRP against corporate debtor. There are grounds to admit the petition. No tenable objections are raised by the corporate debtor about the debt. The financial creditor suggested the name of the IRP and filed his consent in Form-2. The petition is complete and therefore deserves to be admitted. Petition admitted - moratorium declared.
Issues:
1. Initiation of Corporate Insolvency Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor. 2. Disputed claims and objections raised by the Respondent/Corporate Debtor. 3. Admissibility of the petition and appointment of Interim Resolution Professional (IRP). Issue 1: Initiation of Corporate Insolvency Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor: The Financial Creditor filed a petition seeking the commencement of Corporate Insolvency Resolution Proceedings (CIRP) against the Corporate Debtor, alleging non-payment of a substantial amount consisting of principal and interest. The Financial Creditor detailed the purchase order, supply of goods, and subsequent failure of the Corporate Debtor to make payments, leading to financial strain on the Creditor. Despite attempts to resolve the matter through a loan agreement, the Corporate Debtor allegedly failed to honor payments, prompting the Financial Creditor to approach the National Company Law Tribunal (NCLT) for recovery. The NCLT considered the evidence provided by the Financial Creditor, including the purchase order, letters, and loan agreement, and found grounds to admit the petition under Section 7 of the IBC, 2016. Issue 2: Disputed claims and objections raised by the Respondent/Corporate Debtor: The Corporate Debtor contested the petition, claiming financial difficulties and inability to pay the debt owed to the Financial Creditor. The Corporate Debtor argued that the transaction was operational, not financial, and thus, the Financial Creditor should have filed under Section 9 of the IBC, 2016. The Corporate Debtor alleged lack of bona fide on the part of the Financial Creditor and disputed the claimed amount as untenable and unlawful. Despite these objections, the NCLT found that the Corporate Debtor's grounds did not prevent the Financial Creditor from initiating CIRP, and no tenable objections were raised regarding the debt. The NCLT deemed the petition complete and admitted it for further proceedings. Issue 3: Admissibility of the petition and appointment of Interim Resolution Professional (IRP): After considering the arguments from both parties, the NCLT admitted the petition under Section 7 of the IBC, 2016, declaring a moratorium for the specified purposes. The NCLT issued directions to prevent suits or proceedings against the Corporate Debtor, maintain the supply of essential goods or services, and specified the duration of the moratorium. Furthermore, the NCLT appointed an Interim Resolution Professional (IRP) to oversee the Corporate Insolvency Resolution Process, and public announcements were ordered to be made accordingly. The NCLT directed the registry to inform the Registrar of Companies for necessary updates regarding the Corporate Debtor's status. This detailed analysis covers the key issues addressed in the judgment, outlining the legal proceedings and decisions made by the National Company Law Tribunal in Hyderabad.
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