2022 (3) TMI 1224 - 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 - From the daily order dated 17.03.2022, it is clear that the Counsel for the Corporate Debtor has submitted that the One Time Settlement proposal submitted by the Corporate Debtor has not been accepted by the Financial Creditor. The counsel for the Corporate Debtor has therefore admitted the debt and default - 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 and the Corporate Debtor clearly substantiate the Financial Creditor's claim that the Corporate Debtor has indebted and defaulted the repayment of loan amount. Upon appreciation of the documents placed on record to substantiate the claim, this Tribunal admits this petition and initiates CIRP on the Corporate Debtor with immediate effect - Application admitted - moratorium declared.

Summary

Issues:
1. Application for corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code 2016 against M/s. Supertech Ltd.

Analysis:
1. The application was filed by the Union of India against the respondent for defaulting on an amount of ?431,92,53,302 as of 31.01.2021, related to credit facilities availed for the development of a housing project. The respondent failed to repay the loan despite reminders, resulting in the classification of the loan accounts as Non-Performing Assets (NPAs).

2. The respondent raised various contentions in its reply, including challenges to the authority of the applicant, incompleteness of Form 1, and premature filing under the Inter Creditor Agreement. Additionally, the respondent disputed the NPA classification and the adequacy of the applicant's documentation.

3. In response to the reply, the applicant argued that its officer had proper authorization, the debt default was evident, and the claim amount was substantiated. The applicant also highlighted the NPA status and the completeness of its documentation.

4. After reviewing the submissions, the tribunal found the applicant's claim of default on the respondent's part to be valid, leading to the admission of the application and initiation of the corporate insolvency resolution process against the respondent.

5. The tribunal noted the respondent's admission of debt and default during the proceedings, emphasizing the requirement under Section 7 of the IBC to establish financial debt and default for initiating the CIRP.

6. The tribunal concluded that all necessary criteria for admitting the application under Section 7 were met, including the appointment of an Interim Resolution Professional, satisfying the provisions of the Insolvency and Bankruptcy Code.

7. Consequently, the tribunal declared the admission of the application, appointed an Interim Resolution Professional, and imposed a moratorium on certain actions against the corporate debtor as per Section 14 of the Code.

8. The Interim Resolution Professional was tasked with specific responsibilities under the Code, and all stakeholders were directed to cooperate with the resolution process. The tribunal also instructed relevant parties to be informed of the order promptly.

This detailed analysis covers the key aspects of the judgment, including the grounds for the application, responses from both parties, the tribunal's findings, and the subsequent steps taken in the insolvency resolution process.