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2022 (4) TMI 571 - 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 - application barred by time limitation or not - service of demand notice - genuineness of the Mortgage Deed and charging of higher interest by the Corporate Debtor. Barred by time Limitation in terms of Limitation Act, 1963 - HELD THAT - The letter which was issued by the Corporate Debtor to the Financial Creditor clearly highlights the existence of Debt due and Corporate Debtor's willingness to settle the same. There are clear contradictions in what the Corporate Debtor has contended before this bench and what it has communicated to the Financial Creditor - It is clear from the records that the Corporate Debtor has time and again acknowledged the debt which was due and payable to the Financial Creditor - this bench finds no merit in the contentions of the Corporate Debtor w.r.t. the petition being barred by limitation in terms of the Limitation Act, 1963. Non-issuance of Demand Notice - HELD THAT - The present application has been filed under Section 7 of the I B Code. Issuance of Demand Notice being one of the pre-requisites to file an application is a requirement under Section 9 of the I B Code and not under Section 7 - this bench finds no merit in the contentions of the Corporate Debtor w.r.t. the petition being non-maintainable due to non-issuance of Demand Notice for the alleged default/claim. Genuineness of the Mortgage Deed and charging of higher interest by the Corporate Debtor - HELD THAT - It can be clearly seen that it is not in the spirit of the I B Code for this bench to determine the whether the Mortgage Deed entered into was genuine or that higher interest was charged by the Corporate Debtor. It is the role of the Resolution Professional to determine the validity of these claims made by the Corporate Debtor - there are no merit in the contentions of the Corporate Debtor w.r.t. the petition being non-maintainable due to the Mortgage Deed entered into not being genuine or higher interest being charged by the Corporate Debtor as opposed to what was agreed upon. Thus, it is clear that financial debt amounting to more than ₹ 1,00,00,000/- is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, we do not have any objection on record against the application filed for initiation of CIRP against the corporate debtor. Hence, the Application filed by the Financial Creditor is hereby admitted - the application is complete and has been filed under the proper form. The debt amount is more than Rupees One Crore and default of the Corporate Debtor has been established and the application deserves to be admitted. Application admitted - moratorium declared.
Issues Involved:
1. Barred by Limitation in terms of Limitation Act, 1963. 2. Non-issuance of Demand Notice. 3. Genuineness of the Mortgage Deed and charging of higher interest by the Corporate Debtor. Issue-wise Detailed Analysis: 1. Barred by Limitation in terms of Limitation Act, 1963: The Corporate Debtor argued that the application by the Financial Creditor was barred by limitation since the account was declared a Non-Performing Asset (NPA) on 27.09.2014, making 27.09.2017 the latest date for filing an application under the Limitation Act, 1963. However, the Financial Creditor submitted that the Corporate Debtor had admitted its liability in a letter dated 29.05.2019, expressing willingness to settle dues. This letter, along with other documents like the Deed of Pledge and audited financial statements, indicated acknowledgment of debt by the Corporate Debtor. The Tribunal, relying on the judgment in Dena Bank vs. C. Shivakumar Reddy, found that the letter dated 29.05.2019 fulfilled the requirement of Section 18 of the Limitation Act, 1963, thus rejecting the contention that the petition was barred by limitation. 2. Non-issuance of Demand Notice: The Corporate Debtor contended that the application was not maintainable due to the non-issuance of a Demand Notice. The Tribunal clarified that the issuance of a Demand Notice is a prerequisite under Section 9 of the I&B Code, not under Section 7. Hence, the Tribunal found no merit in the Corporate Debtor's contention regarding the non-issuance of a Demand Notice. 3. Genuineness of the Mortgage Deed and charging of higher interest by the Corporate Debtor: The Corporate Debtor questioned the genuineness of the Mortgage Deed executed on 26.12.2014, claiming it incorrectly covered certain assets. Additionally, the Corporate Debtor argued that the interest charged was higher than agreed upon. The Tribunal cited the Supreme Court's judgment in Innoventive Industries Ltd. vs. ICICI Bank, stating that it is not within the Tribunal's purview to determine the validity of the Mortgage Deed or interest rates at this stage. These issues are to be addressed by the Resolution Professional. Therefore, the Tribunal found no merit in the Corporate Debtor's contentions regarding the Mortgage Deed and interest rates. Findings/Observations: The Tribunal noted that the Financial Creditor had established the existence of a financial debt exceeding ?1,00,00,000/- and that the Corporate Debtor had defaulted on this debt. The application was found to be complete and filed in the proper form. Consequently, the Tribunal admitted the application for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Order: The application filed under Section 7 of the I&B Code, 2016, was admitted. The Tribunal declared a moratorium under Section 14 of the I&B Code, prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. The supply of essential goods or services to the Corporate Debtor was to continue uninterrupted. Ms. Vineeta Maheswari was appointed as the Interim Resolution Professional (IRP). The Financial Creditor was directed to deposit ?5,00,000/- with the IRP for expenses. A public announcement of the CIRP was ordered, and the Registry was directed to communicate the order to relevant parties immediately.
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