2022 (3) TMI 1109 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Coporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - Mere plain reading of the provision under section 7 of IBC shows that in order to initiate CIRP under Section 7 the applicant is required to establish that there is a financial debt and that a default has been committed in respect of that financial debt. The documents submitted by the Financial Creditor clearly substantiate the Financial Creditor's claim that the Corporate Debtor has indebted and defaulted the repayment of loan amount. It is thus seen that 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, and as no disciplinary proceeding against the proposed IRP is pending - 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 respects 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 - Application admitted - moratorium declared.

Summary

Issues:
1. Application for corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code 2016 due to alleged default by the Respondent.

Analysis:
1. The application was filed by M/s. Capital Finance and Investments LLP against M/s. Shri Krishna Prasadam Ltd. for defaulting on an amount of &8377; 29,28,210/- as of 04.03.2020. The loan agreement, demand letters, and legal notices were presented as evidence of the default.

2. Despite multiple notices, the Corporate Debtor did not appear, leading to an ex-parte order dated 16.11.2021. The counsel for the Financial Creditor presented arguments and submissions supporting the claim of default by the Corporate Debtor.

3. The Financial Creditor's counsel highlighted the loan agreement terms, issuance of demand letters, and legal notice for the repayment of the due amount. The default was noted to have occurred on 04.10.2019, leading to the application under Section 7 of the Code.

4. The Tribunal reviewed the documents and arguments, concluding that the Financial Creditor substantiated the default claim by the Corporate Debtor. The Tribunal admitted the petition and initiated the corporate insolvency resolution process against the Corporate Debtor.

5. The Tribunal appointed an Interim Resolution Professional as per the requirements of Section 7(3)(b) of the Code. The satisfaction of default occurrence and completeness of the application under Section 7 were recorded before admitting the petition.

6. The Tribunal declared a moratorium under Section 14 of the Code, imposing restrictions on legal actions against the Corporate Debtor and asset transactions. Exceptions to the moratorium were specified, and the Interim Resolution Professional's duties and obligations were outlined.

7. The order was communicated to relevant parties, including the Financial Creditor, Corporate Debtor, Interim Resolution Professional, and Registrar of Companies, for necessary updates and notifications to the public domain.