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2021 (4) TMI 58 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor sought time to make payment for several times. But without making payments they proceeded to sell the assets of the Corporate Debtor, which is a clear case of fraud and cheating - present Application has been settled after admission before making the Public Announcement - existence of debt and dispute or not - HELD THAT - In this case the existence of debt is reasonably evidenced in the consent terms that were also made part of the order of this Tribunal dated 24.09.2020 as well as the averments made by the Corporate Debtor themselves regarding the amount of debt outstanding to the Financial Creditor, admitting the existence of a debt. The Applicant having proved the existence of a debt as well as existence of default, as elaborately discussed in the order dated 25.08.2020 admitting the Application, the only course to be adopted here is to admit this application and order Corporate Insolvency Resolution Process against the Corporate Debtor. The I B Code allows the Applicants to withdraw their Application under Sections 7, 9 and 10 of the Code at any time; a) one before the constitution of the CoC b) after constitution of the CoC but before the invitation of the EoI or c) after the invitation of the EoI in exceptional cases, on application made by the applicant. The present Application has been settled after admission before making the Public Announcement as per Regulation 6 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The I B Code does not bar the Tribunal to Admit a matter which was settled after Admission. Application filed on behalf of Financial Creditor/ Applicant under Section 7 of the I B Code, 2016 for initiation of Corporate Insolvency Resolution Process is admitted - Application admitted - moratorium declared.
Issues:
1. Application for Corporate Insolvency Resolution Process (CIRP) filed by Financial Creditor against Corporate Debtor. 2. Settlement agreement between parties and subsequent non-compliance by Corporate Debtor. 3. Disqualification of Directors raised as an objection by Corporate Debtor. 4. Admission of Application and order for Corporate Insolvency Resolution Process. 5. Appointment of Interim Resolution Professional and related procedures. Issue 1: Application for Corporate Insolvency Resolution Process (CIRP) filed by Financial Creditor against Corporate Debtor The Financial Creditor filed an application seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on a payment of a substantial amount. The Tribunal admitted the application, appointing an Interim Resolution Professional to oversee the process. Issue 2: Settlement agreement between parties and subsequent non-compliance by Corporate Debtor After a settlement agreement was reached between the parties, the Corporate Debtor failed to make the agreed payments, leading the Financial Creditor to file a new application citing non-compliance. The Tribunal reinstated the original application, emphasizing the importance of honoring settlement terms once agreed upon. Issue 3: Disqualification of Directors raised as an objection by Corporate Debtor The Corporate Debtor raised objections regarding the disqualification of Directors, citing a judgment from the High Court. However, the Tribunal found that this objection had no standing, especially after the matter had already been admitted and discussed in detail. Issue 4: Admission of Application and order for Corporate Insolvency Resolution Process The Tribunal admitted the Financial Creditor's application under Section 7 of the Insolvency & Bankruptcy Code, 2016, ordering a moratorium and appointing an Interim Resolution Professional. The order included specific restrictions and directions to be followed during the Corporate Insolvency Resolution Process. Issue 5: Appointment of Interim Resolution Professional and related procedures Following the admission of the application, the Tribunal appointed an Interim Resolution Professional to manage the Corporate Insolvency Resolution Process. The Financial Creditor was directed to deposit a specified amount with the Interim Resolution Professional to initiate the proceedings, subject to ratification by the Committee of Creditors. This comprehensive summary provides a detailed analysis of the judgment issued by the National Company Law Tribunal, Kochi Bench, covering all the relevant issues and legal aspects involved in the case.
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