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2021 (12) TMI 966 - 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 - In the present case, the occurrence of default is evidenced by the copy of sanction letter dated 05.08.2009 and 25.08.2015 wherein the credit facilities were sanctioned to the corporate debtor on certain terms and conditions as imposed by the petitioner. The account of the corporate debtor was classified as NPA on 30.06.2017 and the Petitioner has issued a demand notice dated 24.09.2018 under Section 13(2) of SARFAESI Act, 2002 which is attached as Annexure A/11 of the petition. The copy of CIBIL and CICS report is attached as Annexure A/10 of the petition. The Petitioner has also approached Debt Recovery Tribunal for the recovery of ₹ 16,68,88,936.38 along with pendente lite and future interest and the same is pending for adjudication. The copy of the application filed in DRT-II is attached as Annexure A/9 of the petition. Whether present application is filed within limitation? - HELD THAT - In the present case, it is mentioned by the Petitioner that the corporate debtor has defaulted for the instalment of term loan on 01.04.2017. Further, it is settled proposition of law that as per Article 137 of the Limitation Act, the right to initiate action is three years from the date of default. Thus, its period of limitation of three years expired on 01.04.2020. However, the present application is filed on 26.07.2021 - Even if the date of default is taken as 01.04.2017, the present petition falls within limitation. Moreover, the application filed in the prescribed Form No.1 is found to be complete. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code - Petition admitted.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Determination of default and completeness of the application. 3. Consideration of the application within the limitation period. 4. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium. 5. Direction for immediate expenses deposit and constitution of Committee of Creditors (CoC). Issue 1: Initiation of CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016: The petition was filed by UCO Bank under Section 7 of the Code for initiating CIRP against M/s S.R. Industries Limited. The company's details, including authorized and paid-up share capital, were provided, along with the credit facilities sanctioned by the petitioner over the years. The petition was supported by an affidavit and filed in the prescribed Form 1. Issue 2: Determination of default and completeness of the application: The default was established through various documents, including sanction letters, classification of the account as NPA, demand notices, and reports. The application detailed the default amount, security interests, and proposed Interim Resolution Professional. The respondent corporate debtor admitted its financial inability to pay dues, supporting the petition. Issue 3: Consideration of the application within the limitation period: The date of default was crucial in determining the application's timeliness. The Supreme Court's judgment clarified the definition of default, aligning it with the date of non-payment of debt becoming due. The petition, filed within the limitation period and complete in Form No.1, was deemed admissible. Issue 4: Appointment of Interim Resolution Professional (IRP) and declaration of moratorium: Considering the completeness of the petition and established default, the Tribunal admitted the petition under Section 7(5) of the IBC. A moratorium was declared under Section 14, imposing restrictions on legal actions against the corporate debtor and asset disposal. Mr. R.K. Jain was appointed as the IRP to oversee the resolution process. Issue 5: Direction for immediate expenses deposit and constitution of Committee of Creditors (CoC): The petitioner was directed to deposit funds with the IRP for CIRP expenses. The IRP was tasked with forming a CoC, submitting regular progress reports, and complying with IBC provisions. The order was communicated to both parties, emphasizing the importance of timely action and communication. This detailed analysis of the judgment highlights the key legal aspects and decisions made by the Tribunal regarding the initiation of CIRP, determination of default, adherence to the limitation period, appointment of IRP, declaration of moratorium, and procedural directions for the resolution process.
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