2021 (10) TMI 593 - 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 - HELD THAT - The documents submitted by the Financial Creditor clearly substantiate the Financial Creditor's claim that the Corporate Debtor has defaulted on repayment of loan amount. It is pertinent to mention here that, the Code requires the Adjudicating Authority to only ascertain and record satisfaction in a summary adjudication, as to the occurrence of default before admitting the application. The material on record clearly goes to show that respondent had availed the credit facilities and has committed default in repayment of the outstanding loan amount - the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt. The requirement of sub-section 5(a) of Section 7 of the Code stands satisfied as default has occurred, the present application filed under Section 7 is complete - Application admitted - moratorium declared.

Summary

Issues:
Application for Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code 2016 for default on loan repayment.

Analysis:
1. The applicant, 'M/s. Aone Greenfield Pvt. Ltd.', filed an application against 'M/s. RSJ Developers Pvt. Ltd.' for defaulting on a loan amount of ?5,59,41,232, comprising principal and interest. The loan agreement was executed on 14.03.2016 for ?3,85,00,000 repayable with 12% interest per annum by 31.01.2020. Despite multiple disbursements, the respondent failed to repay the outstanding amount, leading to default.

2. The respondent was proceeded Ex Parte as they failed to appear before the Tribunal despite notice. The documents submitted by the applicant substantiated the default claim of ?5,59,41,232 by the respondent.

3. The Tribunal found the applicant's claim complete and established that the respondent defaulted on the loan repayment, satisfying the requirements of Section 7 of the Code. The Tribunal admitted the petition and initiated Corporate Insolvency Resolution Process (CIRP) against the respondent.

4. The Tribunal noted the appointment of Mr. Naresh Munjal as the Interim Resolution Professional, meeting the requirements of Section 7(3)(b) of the Code. Mr. Munjal accepted the appointment and made necessary disclosures as per IBBI Regulations.

5. The Tribunal directed the Interim Resolution Professional to make a public announcement regarding the admission of the application under Section 7 of the Code within three days. Additionally, a moratorium was declared under Section 14 of the Code, prohibiting certain actions against the corporate debtor.

6. The Interim Resolution Professional was tasked with performing various functions under the Code diligently and in accordance with the rules and regulations. The ex-management and related personnel were obligated to cooperate with the Interim Resolution Professional, and any violations or illegal transactions could be reported to the Tribunal.

7. The Registry was instructed to communicate the order to relevant parties promptly, including the Financial Creditor, Corporate Debtor, Interim Resolution Professional, and the Registrar of Companies. The Registrar of Companies was required to update the status of the Corporate Debtor on its website to notify the public about the petition's admission.