2021 (6) TMI 484 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - loan agreement existed between the Financial Creditor and the Corporate Debtor or not - existence of debt and dispute or not - HELD THAT - There is no loan agreement between the Financial Creditor and the Corporate Debtor. Neither is there any other document/letter that proves that the loan was requested by the Corporate Debtor from the Financial Creditor. There is also nothing on record to substantiate that the loan was given against time value of money. Nothing has been placed on record to indicate that interest was payable. Nor is there any document corroborating the conditions under which the loan was repayable - The Applicant has also not produced the board resolution wherein it would have been resolved that the said loan amount is/was to be disbursed to the account of the Corporate Debtor. The Applicant has produced a copy of relevant pages of bank statement of account bearing 083150550890026 for the periods 10.04.2019 to 16.04.2019 and 04.07.2019 to 12.07.2019, wherein payments received from the Corporate Debtor are reflected. In absence of the entire bank statement after the alleged loan was disbursed and this Application was filed, there is no way to ascertain whether these are the only payments that have been received by the Financial Creditor or there have been more payments - Also, the certificate from the Financial Creditor's bank does not mention that the alleged loan amount has not been repaid by the Corporate Debtor. It only mentions that no amount has been received in the account of Financial Creditor from the Corporate Debtor only between 01.10.2019 and 31.10.2019 - Further, Applicant has filed a copy of Form 26AS showing TDS for Financial Year 2018-2019 by Kohinoor Steel Pvt. Ltd. However, deduction of tax solely does not establish either the debt or a default thereof. The Application made by the Financial Creditor is not complete in all respects as required by law. From the Application and the documents annexed thereto, it cannot be ascertained whether the Corporate Debtor is in default of a debt due and payable, or that the default is in excess of the minimum amount of one lakh rupees as stipulated under section 4(1) of the Code at the relevant time - The documents presented do not inspire the confidence of this Adjudicating Authority. Petition cannot be admitted and is dismissed.

Summary

Issues:
- Application under section 7 of the Insolvency and Bankruptcy Code, 2016 by a Financial Creditor against a Corporate Debtor.
- Existence of loan agreement and default by the Corporate Debtor.
- Adequacy of evidence provided by the Financial Creditor.
- Jurisdiction of the National Company Law Tribunal, Kolkata Bench.

Analysis:
1. The Application was filed under section 7 of the Insolvency and Bankruptcy Code, 2016 by the Financial Creditor seeking to initiate Corporate Insolvency Resolution Process against the Corporate Debtor, who allegedly failed to make a payment of a substantial amount, including interest from the date of default.
2. The Financial Creditor provided documents such as bank statements, cheque copies, demand notices, and certificates to support its claim of loan disbursement and default by the Corporate Debtor.
3. The Corporate Debtor raised defenses claiming the absence of a formal loan agreement, disputing the nature of the transaction, and asserting ongoing payments as evidence of non-default.
4. The Tribunal noted the lack of crucial documents and inconsistencies in the evidence presented by the Financial Creditor, such as the absence of a loan agreement, board resolution, and complete bank statements post-alleged loan disbursement.
5. The Tribunal highlighted the insufficiency of evidence to establish default and the minimum debt threshold required under the Code, leading to the dismissal of the Application due to incomplete submission and clerical errors.
6. Despite dismissing the Application, the Tribunal granted the Financial Creditor the option to pursue its claim through other legal avenues, emphasizing the importance of meeting legal requirements and ensuring accuracy in documentation.
7. The Tribunal directed the Registry to provide copies of the order to all parties involved and their legal representatives promptly, with the possibility of issuing a certified copy upon formal application.

This detailed analysis of the judgment from the National Company Law Tribunal, Kolkata Bench, provides a comprehensive overview of the legal issues, arguments presented by both parties, and the Tribunal's decision based on the evidence and legal requirements under the Insolvency and Bankruptcy Code, 2016.