2021 (4) TMI 1078 - 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 - time limitation - HELD THAT - The instant petition is filed by the Applicant is well within limitation. That apart, the Application is also complete in all respect. The documents so produce by the Financial Creditor clearly establish the 'debt and there is default on the part of the Corporate Debtor in payment of financial debt. Thus, under the facts and circumstances, the Applicant fulfils the requirement of the IB Code and the Applicant is a Financial Creditor within the meaning of Section 5 (7) 5(8)(C) of the IB Code - it is evident that Respondent has committed a default in payment of financial debt and therefore, it is a fit case to initiate Corporate Insolvency Resolution Process by admitted the instant application. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Authorization to file the insolvency application.
2. Existence of debt and default.
3. Admissibility of the insolvency application.
4. Declaration of moratorium.
5. Appointment of Interim Resolution Professional (IRP).

Issue-wise Detailed Analysis:

1. Authorization to File the Insolvency Application:
The respondent contested the authorization of Ms. Nupur Tainwala to file the insolvency application, arguing that she was not an authorized representative of the financial creditor, Invesco Trustee Pvt. Ltd. The respondent cited a board resolution dated 18.10.2019, which authorized Ms. Tainwala, but claimed it did not clearly define the 'Company' she represented. The tribunal, however, found that the board resolution provided specific powers to Ms. Tainwala, dismissing the objection as a technicality.

2. Existence of Debt and Default:
The applicant, Invesco Asset Management (India) Pvt. Ltd., acting as an investment manager, had invested ?15,00,00,000 in secured non-convertible debentures issued by the corporate debtor, M/s. Sintex Industries Limited. The corporate debtor defaulted on the payment of principal and interest, totaling ?15,40,01,506.85 as of 30th September 2019. Despite partial payments by the corporate debtor, the default persisted. The corporate debtor acknowledged the debt and its inability to pay through various communications, including a letter dated 25.07.2019.

3. Admissibility of the Insolvency Application:
The tribunal examined the documents submitted by the applicant, including the debenture trust deed, modification deeds, and notices of default. The tribunal found sufficient evidence of debt and default, fulfilling the requirements under Section 5(7) and 5(8)(C) of the Insolvency and Bankruptcy Code (IBC). The application was deemed complete and within the limitation period, warranting its admission.

4. Declaration of Moratorium:
Upon admitting the petition, the tribunal declared a moratorium under Section 14 of the IBC, prohibiting:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transfer, encumbrance, or disposal of any assets of the corporate debtor.
- Foreclosure or enforcement of security interests.
- Recovery of property occupied by the corporate debtor.
The moratorium will remain effective until the completion of the corporate insolvency resolution process or further orders by the tribunal.

5. Appointment of Interim Resolution Professional (IRP):
The applicant proposed Mr. Pinakin Shah as the IRP, and the tribunal appointed him accordingly. The IRP is tasked with managing the corporate debtor's affairs during the resolution process.

Additional Orders:
- The tribunal directed the registry to inform the Registrar of Companies about the initiation of the corporate insolvency resolution process to prevent any detrimental actions.
- The tribunal disposed of IA/38(AHM) 2021, allowing the respondent's affidavit in reply to be taken on record.
- IA/147(AHM)2021 was dismissed as infructuous following the admission of the main petition.

Conclusion:
The tribunal admitted the insolvency application, declared a moratorium, and appointed an IRP, thereby initiating the corporate insolvency resolution process for M/s. Sintex Industries Limited. The objections regarding authorization were dismissed, and the existence of debt and default was established based on the evidence provided.