2022 (3) TMI 1107 - 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 Applicant Bank has filed the entire set of documents. Furthermore, debt and default has been proved. The Respondent has executed a letter of renewal dated 28.02.2018 and the documents executed by the Respondent in favour of the Applicant Bank which are also enclosed along with the Application. There is no dispute about debt and default. The Application is complete in all aspects. The Applicant Bank has also taken proceedings under Section 13(2) of SARFAESI Act, 2002 for recovery of entire amount due and payable by the Respondent and hence the debt and default is proved. Under the said circumstances, this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted - moratorium declared.

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by Axis Bank Limited against Balsara Engineering Products Limited for initiation of CIRP process.

Analysis:
The Applicant, Axis Bank Limited, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Respondent, Balsara Engineering Products Limited, seeking initiation of the Corporate Insolvency Resolution Process (CIRP). The Applicant claimed that a substantial amount was due and payable by the Corporate Debtor to the Bank. The Respondent had availed various credit facilities since 2008 and had hypothecated movable and mortgaged immovable properties in favor of the Bank. The default date was stated as 28.08.2018, and the Applicant had initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Despite partial payments by the Corporate Debtor, a significant amount remained outstanding as of the filing date of the application.

The Respondent raised objections regarding the completeness of the application and discrepancies in the claimed amount. However, the Tribunal found that the Applicant had submitted all necessary documents, and debt and default were adequately proven. The Tribunal referred to the Supreme Court's ruling in Innoventive Industries Ltd. v. ICICI Bank and Anr., emphasizing that once a default is established, the application must be admitted. The Respondent's reliance on previous NCLT orders was deemed insufficient to dismiss the present application.

After considering the arguments from both parties and reviewing the documents, the Tribunal concluded that there was no dispute regarding the debt and default. The Tribunal acknowledged the Applicant's efforts under the SARFAESI Act, 2002 for recovery. Consequently, the Tribunal admitted the application, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The moratorium period under Section 14 of the Code was invoked, affecting various actions against the Corporate Debtor's assets.

The Tribunal appointed an Interim Resolution Professional (IRP) to manage the Corporate Debtor and oversee the resolution process. The IRP was directed to follow statutory requirements, conduct the resolution process, and submit progress reports within specified timelines. The Directors and associated parties of the Corporate Debtor were instructed to cooperate with the IRP. The Registry was tasked with communicating the order to relevant parties and authorities, ensuring compliance with the Code's provisions.

In conclusion, the Tribunal admitted the application, imposed a moratorium, appointed an IRP, and outlined the necessary steps for the resolution process to proceed, emphasizing compliance with the Insolvency and Bankruptcy Code, 2016.