2021 (6) TMI 280 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - time limitation - HELD THAT - The loan amount was duly disbursed to the Corporate Debtor. The requisites of an application under section 7 of IBC are available on record and duly proved. This is a fit case for admitting the petition, and for initiation of Corporate Insolvency Resolution Process in respect of the Corporate Debtor - petition admitted - moratorium declared.

Summary

Issues:
1. Application under section 7 of Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Dispute over loan repayment between Financial Creditor and Corporate Debtor.
3. Allegations of default and financial crisis due to Covid-19 impact by Corporate Debtor.
4. Validity of application and sufficiency of evidence presented.

Analysis:
1. The Financial Creditor filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor for non-repayment of a loan amounting to ?25,00,000/- along with accrued interest. The Financial Creditor provided evidence of the loan agreement, promissory note, letter of undertaking, money receipt, and dishonored cheque, indicating the Corporate Debtor's default in repayment.

2. The Corporate Debtor, in its reply affidavit, raised objections claiming the application was frivolous, misconceived, and not maintainable under the IBC regulations. The Corporate Debtor alleged that the Financial Creditor had not followed proper procedures and had misled facts. However, the Corporate Debtor admitted default in payment in one part of its reply, while also citing financial difficulties due to the Covid-19 pandemic in another part.

3. The Tribunal carefully analyzed the submissions from both parties and found the Corporate Debtor's objections lacking substance. The Tribunal noted that the loan amount was disbursed to the Corporate Debtor, and the application met the requirements under section 7 of the IBC. The Corporate Debtor's admission of default further strengthened the Financial Creditor's case.

4. Considering the evidence and arguments presented, the Tribunal admitted the petition, declared a moratorium, and appointed an Interim Resolution Professional (IRP) to oversee the Corporate Insolvency Resolution Process. The Tribunal directed the Financial Creditor to deposit a specified amount with the IRP, and set deadlines for the IRP to convene a Committee of Creditors and identify a Resolution Applicant. The Tribunal also instructed the Registry to communicate the order to all relevant parties and listed the matter for a progress report.

This detailed analysis highlights the legal proceedings, arguments, and the Tribunal's decision in the case involving the initiation of Corporate Insolvency Resolution Process based on a loan default dispute between the Financial Creditor and the Corporate Debtor.