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2022 (1) TMI 402 - 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 - Whether a Financial Creditor despite being a Member of Consortium can individually maintain an application under section 7 of the I B Code 2016 seeking initiation of CIR Process against the corporate debtor? - HELD THAT - A perusal of provisions of section 7(1) of the I B Code 2016 makes it amply clear that a Financial Creditor either by itself or jointly with other Financial Creditors or any other person on behalf of the Financial Creditor as may be notified by the Central Government may file an application for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor when a default has occurred - there is no bar for the Financial Creditor to initiate proceedings individually despite being a Member of Consortium of Lenders. Hence the contention of the learned counsel for the Corporate Debtor that the application filed by individual Financial Creditor is not maintainable is devoid of any force or substance. Hence the same is liable to be rejected and accordingly the same is hereby rejected. Whether the applicant herein has made out a case for initiation of Corporate Insolvency Resolution Process (CIRP) against the respondent/Corporate Debtor? - HELD THAT - When admission of debt in this case being as clear as crystal and as the applicant by placing the undisputed demand notice dated 22.05.2018 issued under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) has also established default on the part of the Corporate Debtor this application of the financial creditor has fully satisfied the requirements viz existence of debt and default in repayment of the said debt on the part of the respondent corporate debtor as such this application is liable to be admitted and initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor is bound to be ordered. The respondent Corporate Debtor M/s. Ind Barath Thermal Power Ltd is admitted into Corporate Insolvency Resolution Process under section 7 of the Insolvency Bankruptcy Code 2016 - moratorium declared.
Issues Involved:
1. Maintainability of the application under Section 7 of IBC, 2016 by an individual member of a consortium. 2. Existence of debt and default by the Corporate Debtor. 3. Initiation of Corporate Insolvency Resolution Process (CIRP). Issue-wise Detailed Analysis: 1. Maintainability of the application under Section 7 of IBC, 2016 by an individual member of a consortium: The Corporate Debtor contended that the application filed by an individual member of the consortium is not maintainable, arguing that the IBC 2016 requires a common application by all lenders in cases involving multiple lenders. The Tribunal referred to Section 7(1) of the IBC, 2016, which states, "A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government, may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred." The Tribunal concluded that there is no bar for a Financial Creditor to initiate proceedings individually, even if they are part of a consortium. Thus, the objection raised by the Corporate Debtor was rejected. 2. Existence of debt and default by the Corporate Debtor: The Tribunal examined whether a debt exists between the parties and if there was a default in its discharge by the Corporate Debtor. The Corporate Debtor did not dispute availing the credit facilities and had acknowledged the liability in several letters, including a revival letter dated 15.03.2017. The Financial Creditor had also initiated proceedings under the SARFAESI Act and the RDB Act for recovery of the amounts defaulted by the Corporate Debtor. The demand notice dated 22.05.2018 issued under Section 13(2) of the SARFAESI Act confirmed that the account had been classified as NPA on 31.03.2018. The Tribunal found that the debt and default were clearly established, satisfying the requirements of Section 7 of the IBC, 2016. 3. Initiation of Corporate Insolvency Resolution Process (CIRP): Given the established debt and default, the Tribunal concluded that the application for initiation of CIRP against the Corporate Debtor was justified. The Tribunal referred to several case laws cited by the Corporate Debtor but found them inapplicable to the present case. The Tribunal noted that an Original Application for recovery was pending before the Debt Recovery Tribunal, but this did not preclude the initiation of CIRP. Consequently, the Tribunal admitted the petition under Section 7 of the IBC, 2016, and declared a moratorium as per Section 14 of the Code. The Tribunal appointed Shri Sreekakulam Vamsi Krishna as the Interim Resolution Professional (IRP) and directed the public announcement of the initiation of CIRP. Conclusion: The Tribunal admitted the application under Section 7 of the IBC, 2016, filed by the Financial Creditor, despite being an individual member of a consortium. The Tribunal confirmed the existence of debt and default by the Corporate Debtor and ordered the initiation of CIRP, declaring a moratorium and appointing an IRP. The petition was admitted, and the necessary directions were issued for the CIRP to proceed.
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