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2022 (5) TMI 1363 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT - The debt of the Financial Creditor falls well within the definition of Financial debt in terms of section 5(8) and as such is entitled to file present application. It is very clear that the last payments having been made by the Corporate Debtor on 14th June, 2018 and 19th September, 2019, in Working Capital Demand Loan-II and Working Capital Demand Loan-I respectively, and the petition having been filed on 11/02/2020, the petition is very much within the period of limitation. It is also clear that in spite of the demand notice having been sent by the Operational Creditor on 1st October, 2018, in accordance with the terms and conditions of the Facility Agreements, and since the Corporate Debtor has committed default and has failed to clear its liability of financial debt towards the Financial Creditor, it is liable to be proceeded against accordingly. Petition admitted - moratorium declared.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) 2. Default on credit facilities 3. Limitation period under the Limitation Act, 1963 4. Validity of the petition under the Insolvency and Bankruptcy Code, 2016 5. Appointment of Interim Resolution Professional (IRP) 6. Declaration of moratorium Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP): The petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 by Tata Capital Financial Services Limited (Financial Creditor) for initiating the CIRP against G.I. International Private Limited (Corporate Debtor). The Financial Creditor provided various credit facilities to the Corporate Debtor, which were guaranteed by its directors and mortgaged against properties. 2. Default on Credit Facilities: The Corporate Debtor obtained credit facilities totaling Rs. 14,00,00,000/- but failed to make timely payments, leading to default. The Financial Creditor issued a demand notice on 01/10/2018, but the Corporate Debtor did not comply. The last payments were made on 14/06/2018 and 19/09/2019 for different loan accounts, and the outstanding amount as of 15th January 2020 was Rs. 18,42,94,323.62. 3. Limitation Period under the Limitation Act, 1963: The Corporate Debtor argued that the petition was barred by the limitation period of three years. However, the Financial Creditor provided evidence of revival letters and acknowledgments of debt by the Corporate Debtor, which extended the limitation period. The petition was filed on 11/02/2020, within the limitation period, considering the last payment dates and acknowledgments. 4. Validity of the Petition under the Insolvency and Bankruptcy Code, 2016: The Corporate Debtor contended that the petition was not maintainable as it was initiated for recovery of monetary dues, contrary to the objectives of the Code. However, the tribunal found that the petition was supported by relevant documents, including facility agreements, revival letters, and security documents, establishing the existence of debt and default. 5. Appointment of Interim Resolution Professional (IRP): Mr. Dhiren Shantilal Shah was proposed as the IRP by the Financial Creditor. He consented to the appointment and confirmed that no disciplinary proceedings were pending against him. The tribunal appointed him as the IRP to ascertain the particulars of creditors and convene a Committee of Creditors for evolving a resolution plan. 6. Declaration of Moratorium: The tribunal declared a moratorium under Sections 13 and 15 of the Insolvency and Bankruptcy Code, 2016. The moratorium prohibits the institution or continuation of suits, transferring or disposing of assets, and recovery of property by owners or lessors. The moratorium will remain in effect until the completion of the CIRP or until an order for liquidation is passed. Orders: The tribunal admitted the application for initiating CIRP against the Corporate Debtor, declared a moratorium, appointed Mr. Dhiren Shantilal Shah as the IRP, and directed the Financial Creditor to deposit Rs. 5,00,000/- with the IRP. The matter was listed for the filing of the progress report on 05/07/2022.
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