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2021 (8) TMI 760 - Tri - Insolvency and BankruptcyMaintainability 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 petitioners being the debenture holders, their claims squarely falls within the definition Financial Debt . When once the debt and default are established and the debt is shown to be within limitation, this Bench has no alternative except to admit the Company Petition. All the contentions raised by the Corporate Debtor are beyond the scope of this petition as per settled law. There are no valid grounds warranting the rejection of the Company Petition as the debt and default are clearly established and the debt is also within limitation. The petitioner has also suggested the name of proposed Interim Resolution Professional in part-3 of the Petition along with his consent letter in Form-2. Thus, the present Company Petition satisfies all the necessary requirements for admission. Petition admitted - moratorium declared.
Issues Involved:
1. Authority to file the petition. 2. Default in payment by the Corporate Debtor. 3. Admissibility of the Corporate Insolvency Resolution Process (CIRP). Issue-wise Detailed Analysis: 1. Authority to file the petition: The Corporate Debtor contended that the petitioners lacked the authority to file the petition as the Debenture Trustee, who holds the secured property on behalf of the issuer company, did not file the petition. According to the Debenture Trust cum Mortgage Deed dated 28.03.2016, action in case of default can only be initiated after a decision by the Majority Debenture Holders, defined as holding 75% of the nominal value of the outstanding Debentures. The Corporate Debtor argued that the Debenture Trustee, not the petitioners, should initiate proceedings, making the current petition unauthorized and subject to dismissal. 2. Default in payment by the Corporate Debtor: The Financial Creditor alleged that the Corporate Debtor defaulted in making payments amounting to ?6,82,53,864/-. The petitioners, as Financial Creditors under Section 5(7) of the Insolvency and Bankruptcy Code, 2016, invested in Non-Convertible Debentures (NCDs) issued by the Corporate Debtor for housing projects in Vadodara. Initially, payments were made as scheduled until May 2017, but defaults occurred post-May 2017. The Corporate Debtor admitted in a letter dated 05.02.2019 that no interest was paid post-March 2018, and even for March 2018, only 80% of the payment was made, citing adverse market conditions in the real estate sector. 3. Admissibility of the Corporate Insolvency Resolution Process (CIRP): The Corporate Debtor argued that invoking CIRP is a drastic measure and should only be considered when no other measures are available to recover the amounts. They suggested that the appropriate remedy would be to enforce the security provided under the agreement, as the Debenture Trustee has the power to take possession and sell the assets without resorting to court proceedings. Despite offers to settle the dispute amicably, the petitioners were not agreeable. The Tribunal noted that the Corporate Debtor did not dispute the debt and default and had previously agreed to automatic admission of the petition if the matter was not settled by 25.03.2021. The Tribunal found no valid grounds for rejecting the petition as the debt and default were clearly established and within the limitation period. Findings: The Tribunal emphasized the order dated 25.03.2021, where the Corporate Debtor had agreed to the automatic admission of the petition if the matter was not settled. The Tribunal noted that the Corporate Debtor's contentions regarding the enforcement of security and the drastic nature of CIRP were beyond the scope of the petition. The Tribunal concluded that the petitioners' claims fell within the definition of 'Financial Debt' under Section 5(8) of the Code. As the debt and default were established and within limitation, the Tribunal admitted the petition. Order: a. The Company Petition No. (IB) -798(MB)/2020 was allowed, and CIRP was ordered against Kasata Hometech (India) Private Limited. b. Mr. Jugraj Bedi was appointed as the Interim Resolution Professional (IRP). c. The Financial Creditor was directed to deposit ?5 Lakh towards the initial CIRP cost. d. The Tribunal prohibited the institution or continuation of suits or proceedings against the Corporate Debtor and any action to foreclose, recover, or enforce any security interest. e. The supply of essential goods or services to the Corporate Debtor was not to be terminated during the moratorium period. f. The order of moratorium would be effective until the completion of the CIRP or approval of the resolution plan. g. Public announcement of the CIRP was to be made immediately. h. During the CIRP period, the management of the Corporate Debtor would vest in the IRP/RP. i. The Registry was directed to update the Master Data of the Corporate Debtor and communicate the order to both parties and the IRP. The petition was admitted, and the Registry was directed to communicate the order immediately.
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