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2021 (11) TMI 469 - 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 - HELD THAT - In the present case in hand it is noted that the legal heirs of the Financial Creditor also successor to the Original Financial Creditor now on record. Petitioners vide a notice of demand called upon the Corporate Debtor dated 03.10.2017 to pay to Petitioners. Further it is also noted that money/loan acknowledged by the Corporate Debtor in various financial statements. The contention of the Corporate Debtor that there was understanding that money will be paid after sale of asset only has no substance in it. In the lights of the Hon'ble Supreme Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. 2019 (1) TMI 1508 - SUPREME COURT upholding the Constitutional validity of IBC, the position is very clear that unlike Section 9, there is no scope of raising a 'dispute' as far as Section 7 petition is concerned. As soon as a 'debt' and 'default' is proved, the adjudicating authority is bound to admit the petition. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Application admitted - moratorium declared.
Issues:
1. Jurisdiction of the Tribunal to entertain the Company Petition under section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Claim of Financial Creditors against the Corporate Debtor and evidence presented. 3. Defense raised by the Corporate Debtor regarding the alleged default in repayment. 4. Legal interpretation of the term "default" under Section 2(12) of the Code. 5. Consideration of facts in light of relevant legal precedents and Supreme Court judgments. 6. Admission of the Company Petition and initiation of Corporate Insolvency Resolution Process. 7. Appointment of Interim Resolution Professional and management during the CIRP period. 8. Directions regarding moratorium, public announcement, and financial obligations of the Financial Creditor. Jurisdiction of the Tribunal: The Tribunal established its jurisdiction to entertain the Company Petition under section 7 of the Insolvency and Bankruptcy Code, 2016, filed by the Financial Creditors against the Corporate Debtor. The Corporate Debtor being a public company limited by shares and incorporated under the Companies Act, 1956, falls within the ambit of the Tribunal's jurisdiction. Claim of Financial Creditors: The Financial Creditors, as legal heirs of the deceased founder member of the Corporate Debtor, presented evidence of the debt owed by the Corporate Debtor. The amount borrowed and acknowledged in the audited statements, along with the succession certificates and notice of demand, supported the claim of the Financial Creditors. Defense Raised by Corporate Debtor: The Corporate Debtor contended that there was no default in repayment as the loan was to be repaid from the sale proceeds of a specific asset. However, the Tribunal found this defense unsubstantiated, emphasizing the acknowledgment of the debt in financial statements and the lack of proof regarding the terms of repayment. Legal Interpretation of "Default": The Tribunal analyzed the definition of "default" under Section 2(12) of the Code, emphasizing the non-payment of debt when due and payable. The Corporate Debtor's argument regarding the understanding for repayment from asset sale proceeds was deemed insufficient to negate the default. Consideration of Legal Precedents: Referring to the Supreme Court judgment upholding the Constitutional validity of the IBC, the Tribunal highlighted that once debt and default are established, the petition must be admitted without scope for dispute. This legal position guided the decision-making process in the present case. Admission of Company Petition: After evaluating the submissions and evidence, the Tribunal admitted the Company Petition, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. The completeness of the application and establishment of debt default led to this decision. Appointment of Interim Resolution Professional: Mr. Milind Kasodekar was appointed as the Interim Resolution Professional to oversee the CIRP, following all necessary regulatory requirements. The management of the Corporate Debtor during the CIRP period was entrusted to the IRP, with specific directions for compliance and reporting. Directions and Financial Obligations: Various directions were issued regarding the moratorium, public announcement of CIRP, financial obligations of the Financial Creditor, and communication of orders to relevant parties. The Tribunal ensured compliance with procedural requirements and regulatory frameworks throughout the resolution process.
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