2021 (6) TMI 276 - Tri - Insolvency and Bankruptcy

Maintainability of appeal - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - time limitation - existence of debt and dispute or not - HELD THAT - It is beyond doubt that the default has occurred with respect to the payment of the financial debt due to the Applicant. The disbursement of loan by the applicant is nowhere denied and the same is received and admitted by the corporate debtor. The confirmation of the statement of account by the corporate debtor reflecting the debit of the interest payable, on the said loan amount as agreed @10%p.a. confirms the receiving of the financial debt by the corporate debtor. Moreover, in their audited financial statements for the year ending 31.03.2017 31.03.2018, the said position of the financial debt is confirmed. As per Part IV Form 1 it is submitted that the date default is 09.09.2019 and the application is filed on 21.11.2019, which is well within the period of limitation and not barred by law - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - In the present application, the Applicant is entitled to claim its dues, establishing the default in payment of the financial debt beyond doubt. In the light of above facts and records the present application is admitted. Application admitted - moratorium declared.

Summary

Issues:
- Application filed under section 7 of Insolvency and Bankruptcy Code, 2016
- Disbursement of loan by the applicant to the corporate debtor
- Dispute over collateral security and loan repayment
- Objections raised by the corporate debtor regarding financial creditor status, interest charges, and limitation period
- Arguments and counter-arguments presented by both parties
- Analysis of financial statements and admission of debt
- Jurisdiction of the Tribunal and appointment of Insolvency Resolution Professional
- Direction for deposit by the Financial Creditor and initiation of moratorium period

The judgment pertains to an application filed under section 7 of the Insolvency and Bankruptcy Code, 2016 by an Applicant against a Corporate Debtor for the initiation of the Corporate Insolvency Resolution Process. The Applicant, a limited company, disbursed a loan of ?25,00,000 to the Corporate Debtor, backed by collateral security of shares. However, a dispute arose when the value of the shares provided as collateral significantly decreased, rendering the security ineffective. The Corporate Debtor failed to repay the outstanding amount despite reminders, leading to the application under section 7 of the IBC.

In response, the Corporate Debtor raised objections, contending that the Applicant was not a financial creditor as per the IBC, no interest was charged on the loan, and the application was time-barred. The Applicant refuted these claims, asserting that the Corporate Debtor had acknowledged the debt in its financial statements and interest was indeed charged. The Applicant maintained that the application was filed within the limitation period and fell under the definition of a financial creditor.

After considering the arguments from both parties and examining the documents, the Tribunal found that the default in payment of the financial debt was evident. The Corporate Debtor's admission of the debt in its financial statements and the confirmation of interest payable supported the Applicant's claim. Citing a recent Supreme Court judgment, the Tribunal concluded that the application was within the limitation period and admitted the application under section 7 of the IBC.

Furthermore, the Tribunal asserted its jurisdiction to entertain the application, appointed an Insolvency Resolution Professional, and directed the Financial Creditor to deposit a sum with the IRP to cover expenses. The initiation of the moratorium period was declared, in line with the provisions of the IBC. The order for admission of the application was communicated to the parties and relevant authorities for further action, ensuring compliance with the insolvency resolution process regulations.

This detailed analysis of the judgment highlights the key legal aspects, arguments, findings, and directives issued by the Tribunal in the context of the application under section 7 of the Insolvency and Bankruptcy Code, 2016, providing a comprehensive overview of the case proceedings and decision.